Inflation peaked at 40-year-highs in many countries in the early 2020’s. The deeper effects, however, came from the duration of the inflationary period, not its heights. The compound effect of higher prices after a long period of relatively stable prices forced many consumers to change their behavior and compelled many businesses to rethink their sourcing strategies.

To make better pricing decisions in an inflationary period, companies should:

• Take a segmented, differentiated view: The effects of inflation can vary at the sub-category and sub-segment level. The challenge lies in balancing price increases and decreases that help you meet your objectives
• Practice cost and market vigilance: Intensive tracking of cost, customers, and competitors not only allows better forecasting, but also reduces the risk of surprises
• Build resilience: Your processes should have the flexibility to help you avoid a margin squeeze between higher costs and adverse customer changes.

Many companies have treated inflation as an opportunity to make long-overdue changes to pricing practices.