1% inflation….for some maybe .

Party buyers and suppliers have all now returned from several weeks of globe trotting . Hard negotiations by day, fine dining and quaffing of the world’s best vintages by night. Or at least that’s the perception 

Suppliers can gloat over a hoard of orders, and tremendous new contacts. Buyers will be delighted by the extraordinary deals they have negotiated and brand new products they have found. Or at least that is the dream.

There are many issues facing our market, one of which is, as with others , is the consumer understanding of flat lining inflation. Of course, fuel is down, interest rates are at a historic low, commodities have fallen out of bed, food prices are low, but the reality is that  none of these have much influence over any of our cost base.

Sure many suppliers will have had published few increases, retailers will have little opportunity to raise prices. The truth on price inflation is somewhat different from what the macro economists would have us believe.

Suppliers are facing fluctuating euro/dollar, sterling/dollar, euro/sterling and all in reverse. Price increases on products where competing factories have closed, leaving limited supply, changing conformities leading to higher testing costs. Retailers (particularly in the UK) constantly face ever increasing rents and local business rates, and now in many cases a bigger wage bill. All of this ignores the constant price pressure from online operators home and abroad. For the homegrown online operators they are under pressure from those overseas, putting even more downward pressure on prices. 

The bottom line (being very clichéd) is the bottom line ie profitability. If you are experiencing little growth and little price inflation, the likelihood is your profit margins are decreasing. Is the consumer interested? Probably not , until you are no longer there. Then, we are only party suppliers, their memory will be short , in most cases it will come down to ….do you remember there used to be a party shop here ?still this is a very nice cafe….

At least the retailer will be remembered, if an online operation disappears no one is the wiser. 

So the next time one of your customers complains about you having increased the price of something , lambast them with the realities of commercial life. I would comfortably bet they will care not  one jot. 

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