Raising prices as a last resort: not an option for many companies

Raising prices is essential for companies to get out of the Covid-19 crisis. Especially since they have to deal with higher costs. But for most businesses in Europe, raising prices is not an option in the short term. Research of Euler Hermes shows that only 5 sectors in the Eurozone have the power to increase their retail prices. Euler Hermes is the world's largest trade credit insurer and part of Allianz.
Companies have had to deal with the corona crisis for more than a year. This has led to higher costs on all fronts. According to the economists of Euler Hermes, the current boom in raw material prices is a good example:
As the Covid-19 crisis resolves and vaccination coverage increases, rising costs can be reversed. But Euler Hermes does not expect this to happen before Q3 2021: "That means that companies' margins will remain under pressure for months to come." That is why the trade credit insurer thinks it is important that euro countries continue to support businesses: "There is still a considerable gap to bridge."

Euler Hermes also examined which sectors hardly suffer from the rising costs. For this, the economists developed their own index based on:

  1. short-term pricing power,
  2. demand elasticity,
  3. the trend in profitability,
  4. recent changes in input prices and
  5. the ability to compensate rising input prices through exports.

This shows that there are only three sectors that are not under financial pressure from rising costs: pharmaceuticals, computers and consumer electronics.

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Raising prices as a last resort

Research of Euler Hermes shows that only 5 sectors in the Eurozone have the power to increase their retail prices. Read more.

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Gross savings of Belgian households increased by EUR20bn

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Rising inflation only temporary

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