February 8, 2022
Small Businesses Are Raising Prices to Keep Up With Historic Inflation
The National Federation of Independent Businesses reported that most U.S. small businesses raised prices in January as they struggled to keep up with inflation. Nearly a quarter of respondents said that inflation was their “single most important business problem,” the highest level since 1981.
Bloomberg: A net 61% of owners reported increasing average selling prices last month, the most in monthly data back to 1986, the National Federation of Independent Business said Tuesday. Inflation remains a top concern for small businesses, still cited by the greatest share of respondents since 1981.
“More small business owners started the new year raising prices in an attempt to pass on higher inventory, supplies and labor costs,” NFIB Chief Economist Bill Dunkelberg said in a statement.
Additionally, small businesses owners’ confidence in the economy is falling. Rising costs and ongoing supply chain issues drove small business optimism to an 11-month low.
Reuters: U.S. small business confidence fell to an 11-month low in January amid persistent worker shortages and higher prices for materials, a survey showed on Tuesday.
The National Federation of Independent Business said its Small Business Optimism Index dropped 1.8 points to 97.1 last month, the lowest reading since February 2021.
Scarce workers and rising labor costs remain the main areas of worry for businesses.
Bottom Line: Failed economic policies have resulted in small businesses being forced to pass along higher costs to consumers. This is a recipe for disaster, especially when it’s combined with ongoing worker shortages across the country.