Surging costs of fuel and inventory has substantially affected Main Street
NFIB’s new inflation survey found that inflation has become the most significant problem facing small businesses, with 62% of owners reporting that it has substantially impacted their business. Thirty-one percent of owners reported a moderate impact, and only 6% reported a mild impact.
In March 2022, inflation outpaced labor quality again as the top business problem for small businesses in NFIB’s Small Business Economic Trends survey. Specifically, the rising cost of fuel as well as inventory, supplies, and materials have been named as the top contributing factors to higher costs, with 77% of owners saying price hikes in those areas had a substantial impact on their business.
“Inflation is a new challenge for most small business owners,” said Holly Wade, Executive Director of NFIB’s Research Center. “Inflation has reached levels not seen for the last 40 years and is dominating business decisions for small employers across the country. Small business owners have been adjusting business practices in order to compensate for the inflation pressures resulting from supply chain disruptions, staffing shortages, and rising gas prices.”
Virtually all (99%) owners report that the recent increase in gas and fuel prices has negatively impacted their business. About half (48%) report it has a substantial negative impact, 35% a moderate negative impact, and 16% a mild negative impact.
Small business owners’ main tool to absorb inflation pressure is to pass increased costs on to their customers: 86% of owners report increasing the price of their goods or services. To stabilize costs, about one-in-five (21%) small businesses have reduced quantities of the goods or services they offer, while 31% have taken on debt.
Over two-thirds (68%) of small business owners say they plan to raise average selling prices in the next three months. Nearly half (47%) said they’d raise prices by 4-9%, while another 40% said they intended to raise prices by 10% or more. Increased prices have not led to increased profits, as 84% of owners report lowered business earnings.
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