Newly released polling data shows inflation is a top concern for small businesses as prices continue to rise.
The National Federation of Independent Business released the survey, which shows that 30% of owners named inflation as the single-most important problem in running their business.
“Inflation and worker shortages continue to be the hardest challenges facing small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Even with these challenges, owners are still seeking opportunities to grow their business in the current period.”
In response, many business owners have had to raise their prices, passing some of those costs on to consumers.
“The net percent of owners raising average selling prices decreased two points from August to a net 51% (seasonally adjusted),” NFIB said. “Unadjusted, 9% of owners reported lower average selling prices and 59% reported higher average prices. Price hikes were the most frequent in retail (73% higher, 11% lower), construction (69% higher, 3% lower), transportation (68% higher, 5% lower), and wholesale (64% higher, 0% lower). Seasonally adjusted, a net 31% of owners plan price hikes.”
New consumer pricing data is expected to be released this week, but the U.S. Bureau of Labor Statistics released producer pricing data Wednesday that confirms businesses reason for concern.
The data showed that producer prices rose 0.4% in September, twice the increase expected by Dow Jones. Overall, producer prices rose 8.5% over the previous 12 months.
“Over a quarter of the September increase in the index for final demand services can be traced to a 6.4-percent advance in prices for traveler accommodation services,” BLS said. “The indexes for food and alcohol retailing, portfolio management, machinery and vehicle wholesaling, oil and gas well drilling services, and hospital inpatient care also rose. In contrast, prices for long-distance motor carrying fell 0.4 percent.”
Those increases have small businesses worried. For those businesses making less money, they cited inflation as the top cause.
“The frequency of reports of positive profit trends was a net negative 31%, up two points from August,” NFIB said. “Among owners reporting lower profits, 42% blamed the rise in the cost of materials, 21% blamed weaker sales, 12% cited labor costs, 8% cited lower prices, 6% cited the usual seasonal change, and 3% cited higher taxes or regulatory costs. For owners reporting higher profits, 44% credited sales volumes, 24% cited usual seasonal change, and 18% cited higher prices.”