ECONOMY

Businesses reeling from hikes

Raw material and energy costs are forcing manufacturers to constantly readjust prices

Businesses reeling from hikes

Businesses are going from one shock to another due to successive raw material price hikes and shortages, to say nothing of energy costs.

The government has run out of fiscal leeway for support after the latest package announced last week, and any further measures would add to the deficit and the debt, while a European response to the problem is doubtful and the options for arbitrary interventions in the local energy market are particularly limited, given its European design.

The problems are similar for small and large companies, though they are more acute for the former, as they have smaller raw material stocks and a lower negotiating capacity.

Efforts to tackle the unprecedented hikes are daily for thousands of manufacturers. Professionals speak of price increases reaching up to 80% from last year, stressing that they change their own prices on a daily basis to avoid taking losses.

The already difficult situation has been aggravated by the Russian assault on Ukraine, which accelerated the rising course of raw material and agricultural produce prices. Bakers are buying soft flour at rates up to 60% higher compared to the time before the Russian invasion, while sunflower oil’s price has more than doubled. Companies also have to face shortages in products such as glass, paper, packaging materials, plastic etc.

Besides the material hikes, energy costs have been soaring, forcing daily changes to commodity prices. As a result, the increases for the final users of products are huge, constant and unexpected.

“We currently calculate the cost of our products every day and adjust our prices accordingly in order to avoid sinking into losses,” an entrepreneur in a Greek manufacturing industry with a great exposure in energy tells Kathimerini.

“Our communication to clients is clear: This is our price and we can sell at this only,” he adds, noting that despite the hikes “demand is still there,” though he does wonder for how long.