UK inflation starts to fall: ‘Businesses now need to renegotiate costs down with suppliers’

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This article is brought to you by Retail Technology Review: UK inflation starts to fall: ‘Businesses now need to renegotiate costs down with suppliers’.

UK CPI fell from 10.4% to 10.1% in March, which should prompt companies to start to renegotiate costs with their suppliers, says international procurement and supply chain management consultancy INVERTO, part of Boston Consulting Group.

Sushank Agarwal, Managing Director at INVERTO says, “As costs for suppliers start to come down, businesses should push them to reduce the prices they charge.”

“Falling energy prices, falling freight costs and other basic inputs should reduce costs for the customer but that will only happen if businesses actually ask their suppliers to reduce prices.”

“If suppliers’ prices rise with their production costs, it is only right for them to fall again when production costs decline. Contracts should as far as possible be structured to make sure this happens. This ensures suppliers avoid using inflation as way to grow their profit margins.”

“Businesses should request full transparency from their suppliers to assess whether increased prices are still justified in light of falling inflation. This can make it far easier to negotiate a solution that’s fair to both sides.”

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