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Inflation
Renzo Servadei
We need to realize, as quickly as possible, that we are living in a totally different period marked by inflation compared to the past, otherwise, at the end of the year, the risk is finding nasty surprises in the final balance sheet
This phenomenon is well known to all, in that inflation reduces the value of money over time, that is, it measures the decline of purchasing power or how many goods and services can be purchased with the same amount of money compared to the past. But if this concept is already so clear, why emphasize its importance? The reason lies in the fact that from 1993 until last year, inflation has always been below 5 percent; in 2016 it was even negative.
This means that entire generations of traders have never experienced what was the norm from 1974 to 1984 with inflation stable in double digits with peaks over 20%.
Back then, operators were very careful about changes in price lists as delaying or not applying changes in price was really very dangerous and everyone was aware of that. Now the situation is rapidly changing and a change in mentality is needed fast. Delaying a zero-point increase is one thing, doing it with other numbers can be lethal. In addition, it is also far from easy to distinguish between the official, detected, and perceived inflation rates. According to Istat (National Institute of Statistics), tire prices in May 2022 compared to the same month last year increased by 4.1 percent. If we look at car and light transport vehicle tires surveys the data in the first quarter of 2022 compared to the same quarter in 2021 shows prices soaring by 8.5% for light transport summer tires to 13% for 4x4 summer tires. If we analyse the manufacturers' price lists, we have significantly different data depending on the manufacturer. One thing is certain. We need to realize, as quickly as possible, that we are living in a totally different period marked by inflation compared to the past, otherwise, at the end of the year, the risk is finding nasty surprises in the final balance sheet. To make matters worse we are seeing how, moving from the price of tires to the price of services, things are even worse. A very recent survey by Confartigianato of Venice and Rovigo shows that hourly rates related to tire service are 27 percent lower on average than those charged by mechanics and 34 percent lower than those charged by body shops.
Now more than ever, therefore, it is important to keep an eye on costs and make use of computer aids, that are far more advanced than in the past, to analyse current and future trends and promptly act upon them.
This means that entire generations of traders have never experienced what was the norm from 1974 to 1984 with inflation stable in double digits with peaks over 20%.
Back then, operators were very careful about changes in price lists as delaying or not applying changes in price was really very dangerous and everyone was aware of that. Now the situation is rapidly changing and a change in mentality is needed fast. Delaying a zero-point increase is one thing, doing it with other numbers can be lethal. In addition, it is also far from easy to distinguish between the official, detected, and perceived inflation rates. According to Istat (National Institute of Statistics), tire prices in May 2022 compared to the same month last year increased by 4.1 percent. If we look at car and light transport vehicle tires surveys the data in the first quarter of 2022 compared to the same quarter in 2021 shows prices soaring by 8.5% for light transport summer tires to 13% for 4x4 summer tires. If we analyse the manufacturers' price lists, we have significantly different data depending on the manufacturer. One thing is certain. We need to realize, as quickly as possible, that we are living in a totally different period marked by inflation compared to the past, otherwise, at the end of the year, the risk is finding nasty surprises in the final balance sheet. To make matters worse we are seeing how, moving from the price of tires to the price of services, things are even worse. A very recent survey by Confartigianato of Venice and Rovigo shows that hourly rates related to tire service are 27 percent lower on average than those charged by mechanics and 34 percent lower than those charged by body shops.
Now more than ever, therefore, it is important to keep an eye on costs and make use of computer aids, that are far more advanced than in the past, to analyse current and future trends and promptly act upon them.
