The Cost of Business report assesses how best to tackle inflation and reduce it. The inflation report reveals that causes of the inflation crisis extend beyond fiscal policy and geopolitical tensions. The findings reveal various factors fuelling inflation, advocate for a range of economic recovery strategies, and emphasise the management accountant’s role in reducing inflationary pressures. Recommendations include actionable steps to mitigate inflation such as strengthening supply chains to create supply chain resilience, SME support to provide targeted assistance to small businesses severely affected by inflation, and easing the tax burden.
The AICPA and CIMA have set out proposals that could help bring down inflation faster.
The AICPA & CIMA inflation report includes research among their members. It finds that the current inflation problem has multiple drivers outside of monetary policy and the war in Ukraine. These include issues in labour markets and the supply side of the economy, which could be addressed through policy changes. An increase in productivity would mitigate against inflation by allowing the supply side of the economy to grow and meet demand in a non-inflationary manner.
The report highlights how management accountants are already supporting their businesses in dealing with the consequences and effects of high inflation, and how their skill sets are supporting effective mitigation strategies for their businesses. The report also shows what strategies and actions finance leaders globally are taking to mitigate against inflation for their businesses.
It identifies several additional areas where action could be taken, including:
Addressing the labour shortages which are putting pressure on wage demands while limiting the productive capacity of businesses and increasing costs of goods and services
Increasing resilience in supply chains and clearing supply chain backlogs to help unclog the global economy
Reducing the tax burden for businesses while they are already under pressure from rising prices
Providing specific support for SMEs badly hit by inflation and help drive economic recovery
Providing certainty and stability around regulation and tax to help business’s scenario planning and investment decisions
Ensuring fiscal and monetary policy work together to tackle inflation.