Investment banks are saying we’ve reached peak inflation. Small businesses are still planning to raise prices
But small businesses aren’t on the same page, according to a new survey released Tuesday.
A record 72% of business owners surveyed in March said they plan on raising prices this year as inflation continues to cut into profits, the National Federation of Independent Businesses (NFIB)’s Small Business Optimism Index shows.
“Inflation has impacted small businesses throughout the country and is now their most important business problem,” NFIB chief economist Bill Dunkelberg said of the report. “With inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions.”
Some 31% of small business owners say inflation is now their most significant business challenge, an increase of 5 percentage points from February.
As a result, small business owners’ optimism about the future of their companies continued to fall in March, dropping 2.4 points to 93.2. That marks the third month in a row that the optimism index has fallen below its 48-year average of 98. And the number of owners in March expecting better business conditions ahead reached the lowest level in the history of the 48-year-old survey as well.
That’s partly because so many small businesses are still feeling the crunch from supply chain issues, with 92% of owners saying they are experiencing a significant, moderate, or mild impact from broken supply chains. And the issues may persist as the war in Ukraine rages on and COVID-19 lockdowns in China become increasingly severe.
There’s also the matter of a tight labor market. Around 47% of small business owners reported they still can’t fill job openings at their companies, more than double the historical average of 23%. The hiring difficulties come despite an unemployment rate of just 3.6% and nearly half of all business owners reporting that they are raising compensation to help bring on new employees.
“Every data point from every possible source that we have on the economy right now is indicating that we’re in an incredibly challenging hiring market,” Laura Wronski, a senior manager of research science at SurveyMonkey, a cloud-based survey tool that offers market insights, told CNBC earlier this month. “The unemployment rate is low but inflation is high, so wages have to be high to attract workers.”
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