53 percent of Czech company bosses expect double-digit inflation this year. At the same time, 80 percent of CEOs expect input costs to rise this year, according to the latest PwC CEO Survey of more than 200 CEOs of domestic companies. The year-on-year inflation rate reached 16.2 per cent at the end of November, putting last year’s price increases at their highest levels in 30 years. The Czech Statistical Office will publish December inflation data on Wednesday.
“CEOs know the situation in their companies well, so reality is ahead of the statistics. That is why we can expect that inflation will not fall rapidly this year either. Companies will deal mainly with expensive energy, although they will be partially relieved by price capping. However, energy will be the main driver of price growth in 2023 as well,” said Olga Cilečková, PwC’s financial risks and capital markets partner.
According to the survey, 40 percent of CEOs expect inflation between 11 and 15 percent this year, 11 percent are betting on price increases between 16 and 20 percent, and two percent of executives do not even rule out an average inflation rate above 20 percent.
Even another part of CEOs do not believe in a rapid return of inflation to the Czech National Bank’s 2 percent target. According to 45 per cent of respondents, inflation will be between six and ten per cent, while three per cent of company bosses believe that inflation will fall to between three and five per cent. No one believes in achieving the CNB’s two per cent inflation target.
The main driver of price growth will continue to be rising production costs, as eight out of ten managers expect input prices to rise further this year. For 14 per cent of companies, costs will remain at last year’s level, while six per cent expect prices to fall. Significant price increases have already occurred last year, with half of CEOs admitting that their company has increased the prices of its products and services by more than 10 per cent, while nearly a third have seen prices rise at a rate of more than 15 per cent, the survey says.
“Last year, Czech companies were particularly affected by rising prices of raw materials and energy. No sooner had companies and the economy as a whole begun to recover from the post-Cold War shock than the war in Ukraine hit. The slow recovery of supply and procurement chains and the shortage of some raw materials were compounded by the energy price shock,” Cilečková recalled.
High inflation was already predicted by company bosses for last year in a survey conducted at the end of 2021. Without suspecting the start of the war at the time, a majority of managers expected inflation to rise by over five percent, but the war has significantly accelerated this pace.
Source: PWC and CTK
