The number of small businesses that raised prices on customers in January rose to a 48-year high, reflecting higher costs of labor and materials amid the biggest surge in U.S. inflation since the early 1980s.
The National Federation of Independent Business said a net 61% of small businesses increased prices at the beginning of the new year. That’s the highest percentage since 1974.
The NFIB’s small business optimism index, meanwhile, slipped 1.8 percentage points in January to 97.1 — an 11-month low.
“More small business owners started the new year raising prices in an attempt to pass on higher inventory, supplies, and labor costs,” said NFIB chief economist Bill Dunkelberg. “In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions.”
It was another tough year in 2021 for most small businesses after a good start. The coronavirus came back in successive waves, supply-chain bottlenecks got far worse and the biggest labor shortage in decades developed.
A record number of firms said they raised pay and benefits to try to attract workers, but many still can’t obtain enough labor.
Nor has it become any easier to obtain supplies or get relief from higher prices. Inflation shot up to the highest level since 1982.