How Inflation in the Philippines Can Affect Your Business's Budget and What to Do about It

Running a business in the Philippines, especially a startup, means dealing with constant change, from shifting consumer demands to supply chain disruptions. But among these challenges, one factor stands out for its wide-reaching impact, and that is inflation. Beyond being an economic indicator, inflation is a force that affects everyone. And for enterprises, it impacts nearly every aspect of doing business, from raw material costs and employee wages to borrowing rates and customer purchasing behavior. For startups operating on limited margins and lean teams, even a small rise in inflation can create significant pressure on budgets.

So, what exactly is inflation, and how does it impact your business? In simple terms, inflation refers to the sustained increase in the prices of goods and services over time. As prices go up, the value of money goes down, meaning the same peso buys less than it did before. And because this can squeeze profit margins, spending power is reduced, making financial planning more difficult.

In this article, we explore the specific ways inflation affects startups in the Philippines and what practical steps business owners can take to protect and adapt their operations.

Build a Financial Safety Net for Economic Uncertainty

Dealing with unpredictability is a natural part of running a business, and with inflation, this might come in the form of rising fuel prices or unexpected spikes in the costs of supplies. In such situations, having a reliable financial safety net can make all the difference. This buffer gives you breathing room during tough periods, preventing you from halting operations when inflationary pressures peak.

Maya, a leading name in digital finance, offers Maya Business solutions designed to help entrepreneurs navigate these challenges with smarter business banking options. One such solution is Maya Business Deposit, a digital-first business banking account that lets your money work harder for you. With its 2.5% p.a. interest rate, it earns 20 to 25 times more than traditional business banking accounts, allowing your reserves to grow while remaining liquid and accessible whenever your business needs them.

To deal with rising costs and economic uncertainty, it would be wise to build an emergency fund that can cover 3 to 6 months of essential expenses, such as rent, utilities, and payroll. Consistently setting aside a portion of your profits into your Maya Business Deposit account lets you work steadily toward this goal. The higher interest helps accelerate your progress, while the convenience of business banking online gives you full visibility and control over your funds, helping you stay resilient against market fluctuations without sacrificing flexibility.

Manage Interest Rate Exposure with Smarter Financing

As inflation rises, so do interest rates. This can make business loans more expensive and increase the cost of servicing existing debt. Review your current loans and consider refinancing where possible to lock in lower rates.

Another option to explore, if you are in need of financing, are business loans with borrower-friendly fees and flexible repayment terms. Maya Flexi Loan, for example, keeps costs manageable with its low, transparent charges, allowing you to unlock up to PHP 2 million in additional funding that you can divide into separate loans as needed. It’s a hassle-free financing solution, with approved funds deposited instantly into your Maya Business Deposit account so you can act quickly on urgent expenses or opportunities.

Strengthen Supplier Relationships to Improve Cash Flow

Having a strong relationship with your suppliers is a valuable asset, especially when high inflation rates raise input costs and tighten liquidity. In these situations, working with your suppliers to negotiate better payment terms, bulk discounts, or more flexible delivery schedules can improve your cash flow and help you adapt more easily to pricing volatility.

Moreover, explore long-term contracts with trusted suppliers to lock in rates and reduce exposure to sudden price increases. Also, you may want to consider building partnerships with local vendors who may offer more stable pricing and faster delivery, which also reduces transportation costs.

Use Smart Pricing Strategies to Protect Margins

With the rising costs that come with inflation, you may be forced to consider increasing prices. However, you must practice caution if you decide to do so. Raise prices too quickly, and you risk alienating customers; delay too long, and your margins shrink.

Instead, use strategic pricing methods such as value-based pricing, which focuses on the value your product or service provides, not just the cost. Meanwhile, bundling is another method where you offer product packages that deliver more value without significantly raising costs. You may also try tiered pricing, where you give customers options across different price points.

When introducing price changes, make sure to communicate with customers transparently about the need for adjustments, especially if you're maintaining quality or service standards.

Implement Cost Control Measures to Stay Competitive

Cost control becomes essential when inflation puts pressure on every peso. However, this shouldn’t mean slashing budgets indiscriminately but instead being smarter with your spending.

Evaluate your operations and identify areas where you can save without sacrificing performance. Try making simple adjustments, like switching to energy-efficient equipment, reducing waste in inventory management, automating repetitive tasks like invoicing or payroll, and reviewing subscription services and renegotiating vendor contracts.

Keep in mind that even small savings in multiple areas can add up and help maintain your bottom line, especially during times of financial strain that can come with increasing prices everywhere.

Optimize Supply Chain with Local Resources

Global supply chain disruptions are the bane of businesses, and these often worsen during inflationary periods, especially when transportation and import costs surge. Consider sourcing materials locally and hiring Filipino talent so you not only reduce logistical costs but also gain more control over your inventory and delivery schedules.

Furthermore, working with nearby suppliers also shortens lead times and helps avoid delays due to international shipping constraints. Overall, this localized approach can build a more resilient and responsive supply chain.

Focus on Customer Retention to Sustain Revenue

As inflation reduces purchasing power, customers tend to become more selective with their spending. This makes customer retention more important than ever. Retaining loyal customers is less costly than acquiring new ones, and satisfied customers are more likely to support your business through economic ups and downs. Thus, it pays to keep your customers engaged by offering loyalty rewards or referral incentives, providing consistent, high-quality service, and staying connected through regular updates, promotions, or surveys.Building relationships that go beyond transactions to create a sense of community and trust allows you to secure a loyal customer base and ensure consistent earnings.

Embrace Technology to Future-Proof Your Business

Technology should be part of any modern business’s growth strategy, and while investing in tech may seem counterintuitive during inflation, it can help you reduce long-term costs and operate more efficiently. From accounting software that tracks expenses in real time to inventory systems that prevent overstocking, the right tools can streamline your business and improve decision-making.

What’s more, e-commerce platforms, digital marketing tools, and online payment solutions like those offered by Maya Business also help you reach more customers and adapt to changing consumer behavior, essential advantages in an unpredictable economy.

Cultivate Adaptability and Innovation

Lastly, inflation highlights the need for adaptability. And while tough economic times might seem daunting for an SME, survival and growth during these challenging times will help you learn to pivot quickly, innovate new offerings, and rethink how your business operates.

Spark innovation by exploring new ideas, analyzing emerging trends in your industry, and looking into how you can meet new demands or fill gaps in the market. Being willing to experiment and take calculated risks gives you a competitive edge in uncertain times.

Inflation is a reality that Philippine businesses cannot ignore. Its widespread effects, from rising operating costs to changing consumer behavior, are indeed daunting, but they’re also manageable with the right approach. By building financial resilience, optimizing internal processes, and staying responsive to economic shifts, SMEs can not only survive but grow stronger through inflation.

Let Your Business Thrive in Tough Times with the Help of Maya Business Banking Solutions

Sign up for Maya Business to maximize your savings and build a financial cushion for your enterprise, preparing it for times of uncertainty. Setting up a Maya Business account lets you open a Maya Business Deposit account and enjoy a financial boost in the face of inflation. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. Furthermore, you’ll be able to send money to your partners and suppliers for free via InstaPay and PESONet, letting you save more.

Signing up also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, allowing you to have another funding source to further develop your business. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.

Sign up for Maya Business today to enjoy the benefits of Maya Business solutions.

Running a business in the Philippines, especially a startup, means dealing with constant change, from shifting consumer demands to supply chain disruptions. But among these challenges, one factor stands out for its wide-reaching impact, and that is inflation. Beyond being an economic indicator, inflation is a force that affects everyone. And for enterprises, it impacts nearly every aspect of doing business, from raw material costs and employee wages to borrowing rates and customer purchasing behavior. For startups operating on limited margins and lean teams, even a small rise in inflation can create significant pressure on budgets.

So, what exactly is inflation, and how does it impact your business? In simple terms, inflation refers to the sustained increase in the prices of goods and services over time. As prices go up, the value of money goes down, meaning the same peso buys less than it did before. And because this can squeeze profit margins, spending power is reduced, making financial planning more difficult.

In this article, we explore the specific ways inflation affects startups in the Philippines and what practical steps business owners can take to protect and adapt their operations.

Build a Financial Safety Net for Economic Uncertainty

Dealing with unpredictability is a natural part of running a business, and with inflation, this might come in the form of rising fuel prices or unexpected spikes in the costs of supplies. In such situations, having a reliable financial safety net can make all the difference. This buffer gives you breathing room during tough periods, preventing you from halting operations when inflationary pressures peak.

Maya, a leading name in digital finance, offers Maya Business solutions designed to help entrepreneurs navigate these challenges with smarter business banking options. One such solution is Maya Business Deposit, a digital-first business banking account that lets your money work harder for you. With its 2.5% p.a. interest rate, it earns 20 to 25 times more than traditional business banking accounts, allowing your reserves to grow while remaining liquid and accessible whenever your business needs them.

To deal with rising costs and economic uncertainty, it would be wise to build an emergency fund that can cover 3 to 6 months of essential expenses, such as rent, utilities, and payroll. Consistently setting aside a portion of your profits into your Maya Business Deposit account lets you work steadily toward this goal. The higher interest helps accelerate your progress, while the convenience of business banking online gives you full visibility and control over your funds, helping you stay resilient against market fluctuations without sacrificing flexibility.

Manage Interest Rate Exposure with Smarter Financing

As inflation rises, so do interest rates. This can make business loans more expensive and increase the cost of servicing existing debt. Review your current loans and consider refinancing where possible to lock in lower rates.

Another option to explore, if you are in need of financing, are business loans with borrower-friendly fees and flexible repayment terms. Maya Flexi Loan, for example, keeps costs manageable with its low, transparent charges, allowing you to unlock up to PHP 2 million in additional funding that you can divide into separate loans as needed. It’s a hassle-free financing solution, with approved funds deposited instantly into your Maya Business Deposit account so you can act quickly on urgent expenses or opportunities.

Strengthen Supplier Relationships to Improve Cash Flow

Having a strong relationship with your suppliers is a valuable asset, especially when high inflation rates raise input costs and tighten liquidity. In these situations, working with your suppliers to negotiate better payment terms, bulk discounts, or more flexible delivery schedules can improve your cash flow and help you adapt more easily to pricing volatility.

Moreover, explore long-term contracts with trusted suppliers to lock in rates and reduce exposure to sudden price increases. Also, you may want to consider building partnerships with local vendors who may offer more stable pricing and faster delivery, which also reduces transportation costs.

Use Smart Pricing Strategies to Protect Margins

With the rising costs that come with inflation, you may be forced to consider increasing prices. However, you must practice caution if you decide to do so. Raise prices too quickly, and you risk alienating customers; delay too long, and your margins shrink.

Instead, use strategic pricing methods such as value-based pricing, which focuses on the value your product or service provides, not just the cost. Meanwhile, bundling is another method where you offer product packages that deliver more value without significantly raising costs. You may also try tiered pricing, where you give customers options across different price points.

When introducing price changes, make sure to communicate with customers transparently about the need for adjustments, especially if you're maintaining quality or service standards.

Implement Cost Control Measures to Stay Competitive

Cost control becomes essential when inflation puts pressure on every peso. However, this shouldn’t mean slashing budgets indiscriminately but instead being smarter with your spending.

Evaluate your operations and identify areas where you can save without sacrificing performance. Try making simple adjustments, like switching to energy-efficient equipment, reducing waste in inventory management, automating repetitive tasks like invoicing or payroll, and reviewing subscription services and renegotiating vendor contracts.

Keep in mind that even small savings in multiple areas can add up and help maintain your bottom line, especially during times of financial strain that can come with increasing prices everywhere.

Optimize Supply Chain with Local Resources

Global supply chain disruptions are the bane of businesses, and these often worsen during inflationary periods, especially when transportation and import costs surge. Consider sourcing materials locally and hiring Filipino talent so you not only reduce logistical costs but also gain more control over your inventory and delivery schedules.

Furthermore, working with nearby suppliers also shortens lead times and helps avoid delays due to international shipping constraints. Overall, this localized approach can build a more resilient and responsive supply chain.

Focus on Customer Retention to Sustain Revenue

As inflation reduces purchasing power, customers tend to become more selective with their spending. This makes customer retention more important than ever. Retaining loyal customers is less costly than acquiring new ones, and satisfied customers are more likely to support your business through economic ups and downs. Thus, it pays to keep your customers engaged by offering loyalty rewards or referral incentives, providing consistent, high-quality service, and staying connected through regular updates, promotions, or surveys.Building relationships that go beyond transactions to create a sense of community and trust allows you to secure a loyal customer base and ensure consistent earnings.

Embrace Technology to Future-Proof Your Business

Technology should be part of any modern business’s growth strategy, and while investing in tech may seem counterintuitive during inflation, it can help you reduce long-term costs and operate more efficiently. From accounting software that tracks expenses in real time to inventory systems that prevent overstocking, the right tools can streamline your business and improve decision-making.

What’s more, e-commerce platforms, digital marketing tools, and online payment solutions like those offered by Maya Business also help you reach more customers and adapt to changing consumer behavior, essential advantages in an unpredictable economy.

Cultivate Adaptability and Innovation

Lastly, inflation highlights the need for adaptability. And while tough economic times might seem daunting for an SME, survival and growth during these challenging times will help you learn to pivot quickly, innovate new offerings, and rethink how your business operates.

Spark innovation by exploring new ideas, analyzing emerging trends in your industry, and looking into how you can meet new demands or fill gaps in the market. Being willing to experiment and take calculated risks gives you a competitive edge in uncertain times.

Inflation is a reality that Philippine businesses cannot ignore. Its widespread effects, from rising operating costs to changing consumer behavior, are indeed daunting, but they’re also manageable with the right approach. By building financial resilience, optimizing internal processes, and staying responsive to economic shifts, SMEs can not only survive but grow stronger through inflation.

Let Your Business Thrive in Tough Times with the Help of Maya Business Banking Solutions

Sign up for Maya Business to maximize your savings and build a financial cushion for your enterprise, preparing it for times of uncertainty. Setting up a Maya Business account lets you open a Maya Business Deposit account and enjoy a financial boost in the face of inflation. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. Furthermore, you’ll be able to send money to your partners and suppliers for free via InstaPay and PESONet, letting you save more.

Signing up also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, allowing you to have another funding source to further develop your business. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.

Sign up for Maya Business today to enjoy the benefits of Maya Business solutions.