Inflation warning as almost half of companies plan price hikes

Inflation is looming on the horizon with 42% of companies planning price hikes in the next 12 months, according to a survey of business leaders. 

Higher freight charges, rising salary costs and a substantial increase in the cost of raw materials and components will force businesses to increase prices.

The findings come from the Vistage Malta Confidence Index compiled by Vistage for the Malta Chamber of Commerce. The index for the fourth quarter shows that the proportion of businesses that expect higher profits in the year ahead dropped to 26% from 51% in the previous three months.

The index tallies with what business leaders told MaltaToday recently about the rising cost of sea freight as a result of an international shortage of containers and congested ports.

Farsons Group CEO Norman Aquilina even warned about “a looming threat” from significant price increases across a wide range of raw materials, products and services.

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The Vistage index found that talent scarcity is having bottom line implications since many businesses are increasing wages to retain labour.

Other findings showed that 32% of businesses believe economic conditions in Malta have worsened when compared to a year ago, while 33% believe they have improved. A third said conditions have remained the same.

Asked about economic prospects for the next 12 months, 25% believe conditions will be better, 48% believe they will remain the same, while 26% believe conditions will be worse.

An absolute majority of companies (52%) expect the number of employees over the next 12 months to remain the same, while 34% said they will increase. A minority of companies (12%) said they expect to reduce the number of employees.