Executives around the world feel stymied by current economic conditions: although most respondents face rising inflation, almost half don’t expect their companies to raise prices over the next six months, according to the latest McKinsey Global Survey.1 Furthermore, a significant number of executives aren’t sure whether their companies will raise prices, suggesting that many find it difficult to project even near-term economic changes.
The survey highlights just how much expectations of inflation have escalated over the past six months as food and energy prices have continued to rise: almost three-quarters of the executives now expect higher inflation, up from 60 percent (Exhibit 1). To make matters worse, more than 70 percent say that input costs have already increased (Exhibit 2). A quarter say that these costs rose in a range from 11 to 20 percent over the past six months.
Not surprising, executives in manufacturing have been hardest hit—almost 90 percent report an increase in the cost of inputs. Executives in this sector cite rising energy costs as the global problem...