In dealing with inflation, most Canadian businesses plan to cut costs

In the latest survey from The Business Monitor, released by Modus Research, Canadian executives were asked about inflation and how they plan to deal with costs.

Key findings in this release:

• Expectations of increasing costs/inflation
• Plans for cost cutting
• Past versus future cost cutting

Canadian companies are bracing for inflation and increased costs of doing business

More than 8 in 10 businesses anticipate that the cost of doing business will increase over the next year.

• Fully half (51%) say costs will increase significantly.

Despite the recent easing in the rate of inflation from the early summer, more than half of Canadian businesses think the rate of inflation will increase over the next year (undoubtedly why so many expect costs to increase significantly).

In response to inflation, fully 70% of Canadian businesses expect to do some form of cost cutting over the next year.

The biggest cuts will be to new equipment purchases, with large numbers also cutting: investing in R&D, office/workspace, recruiting and hiring new staff.

These results are consistent across all sizes of business, regionally and by industry sector.

A large increase in cost cutting is coming compared with last year

The number of companies cutting cost this year represents a significant increase over the previous year.

When asked about the costs in these same areas, businesses cut costs over the previous 12 months at much lower levels.

The most sizable shift in the number of companies cutting cost will come in the areas of employee costs, workspaces, and new equipment.

Methodology

The survey was conducted from August 19 to September 5 using the Modus Business Panel – Canada’s only purpose-built, probability based B2B research panel. Because the Panel is built using random probability telephone sampling, it is valid to cite the margin of error for this survey. The survey is based on a representative sample of 600 Canadian managers and executives and has a margin of error of +/- 4.0% pts 95 times out of 100. The survey data is weighted by size and region according to the latest Statistics Canada data to help ensure representativeness for Canadian enterprises.