Inflation spurs 40 percent of small businesses to hike prices: survey

Surging inflation is still weighing heavily on U.S. small businesses – some 40% of which are planning to increase prices by 10% or more to offset their rising expenses.

The results of a survey conducted by the National Federation of Independent Business also hint at the financial obstacles facing American households as businesses pass along the cost of inflation to consumers.

Four in 10 small business owners said they planned to raise prices by at least 10% as they content with the most severe inflation since 1981, according to the survey. Another 47% of small businesses said they would hike prices by between 4% and 9%.

Over the next three months, a whopping 68% of smaller firms said they plan to raise their average selling over the next three months, while 31% said they were checking prices weekly to account for market conditions.

Inflation is “dominating business decisions for small employers across the country,” according to Holly Wade, executive director of the NFIB’s Research Center.

“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,” Wade added.

Inflation has worsened – hitting 8.5% in March – as the Russia-Ukraine conflict added to existing supply chain disruptions. Employers are also facing a nationwide labor shortage and are locked in tight competition to fill open roles with nationwide unemployment at less than 4%.

The Federal Reserve has indicated it plans to take aggressive action to solve the problem, with top officials teeing up sharper-than-expected interest rate hikes in the coming months to curb inflation.

According to the survey, 99% of small business owners noted a negative impact from higher gas or fuel prices. Small firms also identified higher labor, rent, utilities costs and difficulty acquiring key materials needed for their operations as key sources of financial pressure.

The NFIB’s survey results were based on responses from 540 small businesses from April 14 through 17, the organization said.

But small businesses aren’t the only companies raising prices during the recent crisis.

Major consumer goods conglomerates such as Nestle and Procter & Gamble recently detailed their prices hikes – with an executive at the latter acknowledging that high inflation could force some households to cut back on purchases.