NFIB Vice President Rings Alarm Bell on Threat of Decades-High Inflation
In response to increasingly concerning reports of the effects inflation has had on Main Street, NFIB issued a statement from Vice President of Federal Government Relations Kevin Kuhlman last week urging the White House and Congress to support small business.
“Rising inflation has become a serious detriment for the small business community, and as new data shows, small business owners aren’t expecting business conditions to ease anytime soon,” said Kuhlman. “Small business optimism is now at its lowest level since April 2020, while most Main Street employers report that inflation is substantially impacting their business. The administration and Congress should not increase the pressure on small businesses with new taxes and mandates but instead promote policies that would grow and strengthen the small business economy.”
The Bureau of Labor Statistics’ Consumer Price Index, which measures the average change in prices over time, reported on May 11 that all items had risen in price by 0.3% in April, and by 8.3% since over the last 12 months. Energy especially has become more expensive, having increased by 30.3% in cost since 12 months ago.
According to NFIB’s April Small Business Economic Trends (SBET) report, 32% of small business owners report that inflation has become their single most important problem in operating their business, the highest reading since 1980. Owners expecting better business conditions in the next six months dropped to the lowest level ever recorded, with a net negative 50% of owners expecting conditions to improve soon.
Overall, all small employers reported inflation was impacting their business to varying degrees. Over half (62%) reported that inflation is having a substantial impact on their business while about a third (31%) reported it had a moderate impact. Only 6% of owners report it having a mild impact.
The main tool small employers have to absorb inflation pressure costs is to raise prices for goods or services, passing higher input costs on to their customers. Eighty-six percent of small employers are increasing the price of their goods or services.
“Small business owners are struggling to deal with inflation pressures,” said NFIB Chief Economist Bill Dunkelberg. “The labor supply is not responding strongly to small businesses’ high wage offers and the impact of inflation has significantly disrupted business operations.”
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