Businesses caught between rising costs and pinched customers

Inflation is the leading worry of just over one-third of Canadian businesses, according to a recent survey by Ownr, an RBC Ventures company.

Continued inflation – currently on track to be around 5.3 per cent in 2022 – is driving up costs while consumers are increasingly reluctant to pay more.

“Pulled pork is up 20 per cent. Briskets are up almost 40 per cent,” says Jordan Sorrenti, owner of Paddy’s BBQ and Brewery. “Canola is up 90 per cent over last year.

“It’s dumb little things,” added Sorrenti, “but that’s the things that drive your overall costs up.”

He says utility bills are also way up even as customers are only just returning after two years of restrictions and pandemic concerns. Those customers also face cost pressures in their own lives, including fuel, groceries, utilities and insurance rates.

Continued inflation – currently on track to be around 5.3 per cent in 2022 – is driving up costs while consumers are increasingly reluctant to pay more.

“You try to adjust your prices a little bit to the client, but they don’t always understand necessarily,” Sorrenti says.

The Canadian Federation in Independent Business reports members are facing tough decisions as they try to keep up with steeply rising costs.

“Only around 40 per cent of Alberta small businesses report having to increase their prices and a lot of them report it had a damaging effect on their overall customer base,” says CFIB western director Annie Dormuth.

“Only around 40 per cent of Alberta Small businesses report having to increase their prices and a lot of them report it had a damaging effect on their overall customer base,” says CFIB western director Annie Dormuth.

On Wednesday the Bank of Canada raised the interest rate by a full half-per cent, the largest single rise in 22 years. Rate increases help curb spending, but also raise the cost of holding debt, further pinching many consumers.

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