In December, while the U.S. government’s index of wholesale prices experienced a third consecutive monthly decline, the IT sector saw month-over-month increases. Servers led the price hike with a 1% increase and data storage followed suit with a 0.1% uptick. These price increases have been happening for four months in a row in the tech stuff. This means more people want to buy servers and storage now after a slow period in 2023.
Despite the overall 0.1% decrease in the Producer Price Index (PPI) for December, the IT sector showed resilience with month-over-month price increases. Data processing, cloud computing and related services observed a 0.5% increase.
Senior executives express increasing concern over inflation, with reports indicating it as a top external worry for 2024. The Conference Board’s survey reveals that 41% of C-suite executives worldwide rank inflation as their second-highest concern, following only recession. Similarly, AlixPartners’ Disruption Index, based on responses from over 3,000 CEOs globally, highlights 41% identifying interest rate instability and the inflationary environment as a threat.
Despite these inflation worries, 56% of business leaders, according to Capgemini’s survey of 2,000 organizations in 15 countries, are optimistic about their companies’ 2024 outlook. This compares to 42% expressing optimism in 2023. The report says that even though the market is a bit shaky and prices are going up a lot, most big bosses feel sure that their companies can handle any problems that come up.
More companies wanting servers and storage is making the prices go up. According to Bloomberg Intelligence, businesses are putting servers at the top of their shopping lists this year and the sales of AI servers are going to help with this increase. Forty-one percent of CIOs are allocating a significant portion of their server spend for AI servers.
As cloud prices continue to rise, concerns are raised over Software as a Service (SaaS) shrinkflation, affecting 28% of businesses. Eric Helmer, CEO of Rimini Street, says that when companies pay for cloud services every month, they might get less cool stuff for the same money. This makes the CIOs worried about not knowing how much things will cost.
