In the US, corporations have begun to talk about elasticity in their investor calls as the inflation grows rapidly. Elasticity is an economic concept to describe consumers’ sensitivity to price change. For example, a product is relatively elastic if consumers switch to a substitute due to a small price increase. On the other hand, if a significant price increase of a product changes little on its demand, then this product is deemed as inelastic. 

Elasticity plays an instrumental role in business strategy, especially during a period where all prices are rising. There are two parts that matter in the pricing strategy – the product and its consumers. First, the elasticity of the products is an indicator of the attractiveness of the products, whether the products remain in demand despite the high inflation. Meanwhile, consumer segmentation impacts the sales performance. Target consumers of Safeway, an American supermarket chain, are more vulnerable to high inflation than those of Prada. As a result, Safeway may suffer from lower sales revenues than Prada.

On a broader scale, if more corporations, regardless of the industry, brand, and target consumers, start to obsess over elasticity in their briefings, it may be a signal for a wider range of consumer cutbacks, which may reinforce the economic pressure that already impacts many Americans.