Rising energy prices will increase business costs and decrease profit margins for companies around the world, a business consultant said on Wednesday.
Energy commodity prices – including oil, natural gas, and coal – have risen in recent weeks as supply remains tight and demand rebounds from a slowdown caused by Covid. This has contributed to electricity and fuel shortages from Europe to Asia.
“This is a big problem for companies. It will reduce your profit margins because as your input costs increase, how quickly can you increase your selling price, “Richard Martin, Managing Director of IMA Asia, told CNBC’s” Squawk Box Asia. “
India and China could be at risk
Companies in the US would have a better chance of protecting their profit margins thanks to a “very buoyant” consumer market, Martin said, adding that they can raise selling prices quickly.
But those in other countries have more dire prospects, the adviser said.
“In many countries in the world we don’t have such a lively consumer market. China is one, in fact much of East Asia is in this area. And when costs go up, profit margins go down, ”said Martin.
India is also at risk. Martin noted that the Indian stock market is in crisis, but the South Asian country will struggle to pass the cost on to consumers.
