52% of Irish SME businesses have taken the step to raise their prices, according to the latest Linked Finance SME Confidence Index.
Recent Central Statistics Office figures show that inflation stood at 4.6% for July, down from 4.8% in June and 9.6% in July last year.
Linked Finance said that initial steps taken by businesses to tackle the inflation squeeze have focused on price increases, but as the rate of inflation slows down, businesses are looking to boost earnings.
Today’s survey, which is based on research conducted by Behaviours & Attitudes, found that 54% of businesses have taken measures beyond pricing to mitigate the effects of inflation.
34% of businesses have cut their operational costs, 19% have pursued product diversification and 12% have introduced discounts and promotions to navigate the challenging economic environment, according to the survey.
But the survey also points to some positivity with signs that fewer businesses are anticipating a decline in activity for the upcoming quarter.
The index shows that 83% of businesses expect to perform better or in line with projected expectations compared with the same time last year.
Linked Finance said that in a surprising turn, the retail sector has demonstrated a “remarkable” performance, defying expectations.
“This quarter, retail businesses have seen significant gains in their business activity. Recent findings from the ESRI also found that strong improvements in retail sales continues to drive growth in the Irish economy,” today’s report said.
But it also noted that 75% of Retail & Wholesale businesses have increased their prices, which it said reflected the overarching trend of price adjustments in response to inflationary pressures.
“Notwithstanding inflation and a price squeeze on businesses and consumers, there is evidence of the resilience that defines Ireland’s SME sector and reflect its adaptability in the face of changing economic currents,” Niall O’Grady, CEO of Linked Finance said.
“The ability for businesses to innovative and put solutions in place such as product diversification and promotional campaigns, underscores the evolving strategies adopted by businesses as they navigate through a phase of tempered enthusiasm,” he added.