The Private Sector Commission is urging all businesses to contribute to macro economic stability and improved conditions for budgeting by properly factoring risks in their supply chains and ensuring that they are adequately stocked throughout the year.
The call comes in recognition of the fact that suppliers contribute to inflation pressures by increasing prices when goods are in short supply. “While the commission acknowledges that this situation occasionally results from circumstances beyond the suppliers’ control, it is nevertheless incumbent upon suppliers to gauge potential risks in their supply chain and order their supplies in advance accordingly,” it said in a press release.
The release added that increasing prices have serious deleterious effects on the economy even though it is typical to raise prices in response to conditions of short supply. Temporary price increase occasionally introduces uncertainty about the general level of prices which could prompt other suppliers to increase prices of unrelated goods.
This translates into excessive levels of inflation for no other reason than that of suppliers underestimating demand for their goods. This could mean higher than normal wage increases for businesses which may likely wipe out short-term profits in the new year.
