Emerging from the pandemic and after a sustained period of low inflation, we enter a period of high inflation and a cost-of-living crisis. A crisis that may have the most substantive impact upon society and consumers, thus far.
The question is whether orthodox responses are sufficient, or do governments, policymakers and businesses need a new toolkit so that increased opportunity and equality are built into recovery models?
Inflations are affecting people across the world differently. Recently, there have been reports about inflationary inequalities that are gendered and harmful to any society. High inflation also discriminates with those on low incomes, women and girls being disproportionately affected. A recent survey recorded that the prices of several women’s products rose by up to 50%-75% (shoes) against those of men, cited at 10%-15%.
The pattern is the same across a range of other products. Emerging from the pandemic, a further shock to those most vulnerable is cruel hand. The current inflationary pressures are making outgoings raise at a higher rate than incomes. The long-term impact on financial, mental health and well-being for those affected is incalculable.
For governments, there are several opportunities to fully integrate policy decisions covering monetary, fiscal, supply side, social welfare, and mobility, offer an opportunity to build in longer term resilience and opportunity enhancement into the system. Several examples being:
- Governments and central banks working together to tackle inflation and seek to provide targeted support to those most vulnerable.
- The development of fiscal wealth funds based upon surplus reserves so that the wealth benefits can be shared by current and future generations. The fund can be used to manage and absorb shocks to the system, and possibly include schemes introduced during the pandemic.
- Long term investment in skills, technology and responsible innovation to ensure that the infrastructure and human capital is future ready. Governments, working with industry, should seek to increase the value of people through an integrated and coordinated skills revolution.
The examples, whilst not exhaustive, provide a view of how governments can restructure and reset relationships with markets, business, and society as a whole.
For businesses, there are several opportunities:
Re-examine and reinvent value propositions, diversify, and focus upon value and needs. Paying particular attention to products and services that relate to the most vulnerable within our society (e.g. women and children) to ensure that offerings and practices contribute to positive outcomes, and do not inadvertently make matters worse.
Invest in technologies such as cloud, robotics and AI that can act as points of differentiation and to drive efficiencies. This will allow businesses to redirect resources to the front line and value-based activities.
Leverage and maximise the benefits of advanced data analytics to determine patterns of behaviour and changes in spending habits. Advanced data analytics and sentiment analysis can also assist in understanding the overall mood. Businesses than can match product and brand strategies accordingly. A recent example is that of the CO-OP. The supermarket replaced its Christmas TV adverts with support for Community Fridges.
Maintain commitment and investment in the ESG agenda, appreciating that margin pressures may challenge this thinking. Remodelling ESG agenda with the crisis support those most vulnerable in society today.
We have endured multiple crises – the type and extent of which are multi-generational in terms of frequency. The long-term impacts of which are yet to be fully understood. This crisis will end, perhaps to be replaced by another. However, there is a window of opportunity to renew and reset and capitalise upon a shift in behaviour coupled with expected policy adjustments.
It is time for a new toolkit. This will require leaders to balance cost and efficiency measures will strategic investments – focusing upon the longer term and placing customers, talent and ESG at its centre.