How CEOs can navigate US inflation hikes, by McKinsey

Last year, there was a general consensus among policy makers, economists, and financial-market participants around the causes of rises in inflation. Coming off the back of the COVID-19 pandemic, it was easy to point the finger at that disruption as the reason, however CEOs told McKinsey that they saw this debate as being detached from the realities of business. Those CEOs said higher inflation was already “permanent enough” to start asking if a fundamental shift in how they led their organisations was needed.

The first months of 2022 have seen unprecedented inflation rates not seen for decades, and well above the 2.0% target most planners and central banks strive for.

The consumer price index rose by 8.5% from March 2021 to March 2022 in the United States (a 40-year high), 7.5% in the eurozone, and 7% in the United Kingdom. Russia’s invasion of Ukraine have put extra pressure on supply chains and therefore inflation.

And just this week, the US Federal Reserve increased interest rates to their highest rate for 22 years as it fights to control spiralling prices.