Small business owners are feeling the sting of surging inflation.
One in three (33%) of small business owners polled in Q1 said that inflation costs are their primary concern in running their business, according to a quarterly survey from the U.S. Chamber of Commerce and MetLife. The survey, conducted in January amid Omicron surges in the U.S., reveal that inflation and supply chain challenges still rank among the top concern for small businesses.
Given inflationary challenges, 67% of small business owners said they have raised their prices to stay afloat. 41% said they have cut their staff and 39% said they have taken out a loan in the last year.
Across sectors, small retailers reported that they were more likely (80%) to increase their costs of goods than professional services (68%), manufacturing (65%), and services (56%).
Consumer prices rose by 7.9% in February compared to a year ago, according to the Bureau of Labor Statistics’ monthly report. This number was up from the 7.5% growth in January and represented the highest inflation rate since the 12-month period ending in January 1982.
The producer price index, which measures the cost of goods from suppliers, rose 10% percent in February year over year.
Meanwhile, consumer spending has started to slow down as well. In February, consumer spending increased 0.2% but at a slower pace than expected amid rising inflation. And when adjusted for inflation, spending fell by 0.4%.
“Inflation is top-of-mind for small businesses as it continues to limit their purchasing power, forcing small businesses to raise their prices and absorb higher costs within already thin margins,” said U.S. Chamber VP of small business policy Tom Sullivan in a release. “The Administration and Congress need to focus on easing the burden on small businesses by reducing inflationary pressures and addressing the worker shortage crisis to ensure continued recovery on Main Street.”
After inflation, small business owners’ next top concerns were regarding supply chain disruptions, COVID-19 protocols, revenue and employee morale.
Despite the challenging environment, some small business owners remained optimistic about the return to normalcy, with 51% reporting that they believe conditions will level out in six months to a year.