Inflation Forcing Small Business Owners to Absorb Costs & Raise Prices
By: Kerry Pipes
Published: August 3rd, 2022
Inflation continues to impact small business owners and 75% of them said the problem is getting worse, according to a new study from the NFIB. They also said they are absorbing inflation costs and raising prices.
More than half (56%) of small employers reported that inflation is having a substantial impact on their business while about a third (35%) reported a moderate impact. Three quarters (75%) of owners reported that inflation pressure is getting worse and a quarter (25%) reported about the same.
“Inflation has set in on Main Street and owners across the country continue to make business decisions in response,” said Holly Wade, executive director of NFIB’s Research Center. “As owners manage the highest inflation rate in decades, they are also managing an ongoing worker shortage and supply chain disruptions, which is hurting their businesses and consumers.”
Highlights from the report:
- Over three-quarters (79%) of small employers reported that rising “fuel (gasoline, diesel, fuel oil, etc.)” prices are a substantial contributor to higher costs.
- Seventy-two percent of small employers reported “inventory, supplies, and materials” as being a substantial contributor to higher costs.
- Eighty-six percent of small employers are increasing the prices of their goods or services. Of those increasing prices, 7% reported that the effort was absorbing all their total cost increases, 36% reported most, about half (47%) reported some, and 9% reported a little.
- Seventy percent of small employers are planning to raise average selling prices in the next three months and 17% were not sure.
- Almost all (96%) of small employers reported supply chain disruptions having some degree of impact on their business.
- Sixty-seven percent of owners reported that higher interest rates are having some degree of a negative impact on their business.
- Thirty-four percent reported higher interest rates impacting their business by increasing the cost of financing. Fourteen percent said increasing the cost of financing for their customers, 42% responded slowing general consumer spending, and 5% responded reducing financing options.
You can read about the full survey here.
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