As inflation whips up, Estevan businesses look to weather the storm

In an announcement today, inflation has risen to 7.7% for the month of May, up from April's 6.8%.

The federal government also released figures such as an energy increase of 34.8%, a gas price increase of 48%, and a grocery cost rise to 9.7%.

That will also include other figures, with prices for many services and raw materials will likely to continue increasing.

Estevan Chamber of Commerce Executive Director Jackie Wall says our southeast community is also going to feel the hit of inflation as prices increase everywhere.

"It has the same effect that it has for businesses and consumers alike and that is the rising cost of materials, the rising costs of goods. For businesses, that means a rise in the cost of workers, rent, raw materials, utilities, gas, everything is going to be increasing as far as capital costs for businesses."

While the effect that this will have on business is largely unique, one aspect does have a large influence on all of them: their debt.

"I would say that it's very unique to the business and the state that the business is in. If a business is carrying a large amount of unsecured debt, maybe debt that's not locked in at this point, that will really increase as well, their cost of borrowing." 

"I've been advising this actually to people since last fall," says Wall, "That if you have any rates that are a floating rate with a financial institution, go in there and try to get those locked in for as long a time as you can because these inflation effects are going to be felt for a long time."

The cost of borrowing is likely to affect different businesses uniquely, depending on their suppliers and their debt situations.

As a province, there will be some harshness from that inflation but Wall believes businesses have been prepared over the last two years of unstable business.

"Saskatchewan is actually vulnerable just as a province because we are a net exporter of goods, so we will be seeing prices go up. I think businesses have, over the last several months, and the last two years, have been looking for new suppliers and making sure they have supply diversity so they have more options moving forward."

Estevan in particular can weather the storm well due to its resiliency lent by the local economy as well as the forward-thinking business people of the community.

"I think Estevan is particularly resilient because of the nature of our economy. I think we also have a lot of smart business people who have been watching this over the last several months and knew already last summer that there were potentially going to be inflation issues moving forward, so I would say there were a lot of smart business people that were trying to set themselves up as best they could to weather the storm of increasing inflation."

Wall says she recommends people keep an eye on the federal government and the Bank of Canada for any more news on inflation.