About one in every four enterprises in Greece (23.6%) raised their prices in the first half of the year, while 22.2% say that they will increase their prices in the coming months too, according to the biannual survey of the Small Enterprises Institute of the Hellenic Confederation of Professionals, Craftsmen and Merchants (IME GSEVEE).
The findings show it will be hard to contain the anticipated price hikes, given also that 42.4% of small and medium-sized enterprises say they only have liquidity available for another month or so, and another 21.4% admit they have no cash flow.
These phenomena constitute a vicious cycle: The shortage of liquidity does not allow for the absorption of increased prices – in some cases this shortage constitutes a pretext for hikes – that are then inflicted on the final customer. This may lead to a slump in demand, further exacerbating the problem in corporate liquidity.
The above rates of businesses that have raised or will raise prices constitute all-time highs for the IME GSEVEE survey. “The increase in prices is a forerunner to the inflationary pressures all economies will suffer,” the federation comments: “Such pressures, combined with a possible recessionary trend from the extension of the pandemic, bear the risk of stagflation, a phenomenon that emerged in 1973 and tormented economies for about a decade. Therefore the way the price increases are tackled will be crucial,” added GSEVEE.
The hikes, the fact that the pandemic is continuing with new variants and the drop in daily vaccination rates, and the technological shortcomings of small enterprises compared to their bigger, digitally prepared counterparts, put into doubt the sustainability of many SMEs. According to the same survey, 36.7% of businesses expressed fear that they might have to halt their activities over the next few months.
The data on the enterprises whose operations were suspended by government order are even more bleak: The majority (50.9%) express the fear they will shut down in the coming period, a rate that comes to 48.5% across the food service sector.