Inflation affects every business, but not all in the same way.
For medium and large businesses, being prepared for inflationary pressure is essential , because unlike small firms, they often can’t react quickly when prices rise.

Here’s how to measure and manage your exposure.

1. Track Your Industry’s Inflation, Not the General CPI
Don’t rely on the national Consumer Price Index (CPI) alone.
Each industry experiences inflation differently , sometimes much higher than the general rate.
For example, manufacturing or food-related businesses may face sharper price hikes in materials and logistics than the average CPI suggests.
Knowing your industry-specific inflation rate helps you plan more accurately.

2. Understand Your Price Elasticity
Ask your business advisor to estimate your price elasticity , how sensitive your customers are to price increases.
If your elasticity is high, it means your customers are very price-sensitive, and you won’t be able to pass inflation costs to them easily.
That means a larger share of inflation stays within your business , eating into profits even if sales remain steady.

3. Examine Your Business Structure
Break down your cost components and see where inflation hits hardest:

• Raw materials and supplies

• Average wage increases

• Machinery and equipment replacement costs

• Energy and utilities

Identify which of these areas carry the biggest risk.
If your supply materials are your largest inflation driver, strengthen relationships with suppliers who can offer:

• Flexible payment terms

• Stable pricing agreements

• Longer contracts that protect against sudden increases

Or, explore alternative suppliers or sourcing strategies to spread the risk.

4. Prepare, Don’t React
Inflation is cyclical , it will come and go.
The goal isn’t to predict when it hits, but to build resilience before it does.
A business that regularly tracks its inflation exposure, understands its elasticity, and strengthens its cost structure will always be more prepared than one that reacts after the fact.