CFOs respond to inflation with raising prices as their primary strategy but they also recognise that this strategy is unsustainable if the issue persists long-term, said Gartner recently when releasing results of a survey.
A May survey of 182 CFOs and senior finance leaders showed that CFOs will increasingly turn to cost reductions if above-average inflation continues into the fourth quarter of this year, while also seeking efficiency gains through increased automation, the advisory firm noted.
“CFOs are receiving feedback from customers that the limit to price hikes is near,” said Alexander Bant, chief of research in the Gartner Finance practice. “This reality has already set the planning process in place for other strategies, most notably cost reductions and enhancing digital capabilities for increased use of automation.”
- 54% said that price hikes remain their top tool for now, but only 25% expected to continue to rely on price hikes if high inflation remained in Q4 of 2022.
- The trend was opposite for cost reductions, with just 20% of respondents currently favouring the strategy as their primary tool, rising to 39% if inflation persists.
Automation as an inflation strategy
In addition, some CFOs respond to inflation with automation.
The survey data revealed that automation will remain a consistently viable primary action for about a quarter of CFOs over the short and medium term, with interest in this strategy slightly rising if inflation persists, Gartner said.
Automation and price increases were selected by a near equal amount respondents as their planned primary action to combat inflation, if needed, in Q4 of 2022, the firm added.