Inflation Affecting Retail Industry In 2022-2023

By Snehal Singh , 14 June, 2023

The global economy is facing new challenges in 2023 due to various reasons. Without any deviation, this leads to a slowing economy that further checks the market growth. A blooming labor economy enhances sales in the market. 

According to International Monetary Fund (IMF), Some selected economies, which account for 83 percent of world output, and advanced economies like the United States and the United Kingdom, showed growth projections annually for the Gross Domestic Product (GDP) of about 0.5 and 1 percent for 2023. These two countries accounted for 3.2 and 2.3 percent of projections for 2022. For the blooming market and advancing economies like India and China, IMF accounted the annual growth projections in the GDP to be 6.1 and 4.6 percent, respectively, in 2023, and these countries accounted for 7.4 and 3.3 percent, respectively, in 2022. 

The retail sales sector is facing many challenges as high inflation rates have already engulfed the global economy; a rise in interest rates, and the price of commodities increasing daily, among other factors, is leading to a slow-paced economy for 2023. The consumer prices globally for the developed economies is 3.3 percent in 2023, up from 6.3 percent in 2022, whereas for advancing economies of the world, it went from 9.5 percent in 2022 to 7.3 percent in 2023. Both cases differ, as in the former one, the economy of the advanced nations is seen to have risen as the consumers agree to pay more. Still, an inflation rate hike in developing economies lessens the demand for commodities and services. The inflation rate for euro areas is 7.3 percent in 2022, which will be 3.9 percent in 2023; for the United States, the inflation rate was 7.7 percent in 2022 and is expected to reach 3 percent in 2023, as per the reports produced by IMF. Hence, the change in the inflation rate will impact the consumers’ demand for commodities at retail prices. Thus, a business will lose revenue due to high inflation rates that decrease the goods buying power.