Inflation Concerns Rise Among Small Businesses

Small business owner looking a receipts
Small business owner looking a receipts | Image by Ground Picture/Shutterstock

The National Federation of Independent Business indicated inflation as the biggest problem affecting small businesses in December.

The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 1.3 points in December to 91.9, marking two consecutive years below the 50-year average of 98, according to the latest NFIB report.


In total, 23% of small business owners reported that inflation was the “single most important problem in operating their business,” a one-point increase from the prior month, replacing labor quality as the top concern.

“Small business owners remain very pessimistic about economic prospects this year,” said NFIB chief economist Bill Dunkelberg in the report. “Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”

Though the outlook among small businesses has been below average, many owners have seen improvement over the last year and expect further improvements following the first two quarters of 2024.

For instance, during peak inflation in June 2022, small buasiness owners expecting a better future outlook dropped to -61% compared to -36% in December 2023. Additionally, according to the report, small business owners expecting better business conditions over the next six months rose six points from November after adjusting for seasonality.

Small business owners planning to offer pay raises in the next three months saw a slight decrease in December. Overall, a net 29% of small business owners plan to raise wages during the first quarter of 2024, which was down one point from November.

The percentage of owners raising prices on customers was unchanged from November at a net 25%, and the percentage of owners who expect higher inflation-adjusted sales increased four points from November to -4%, “the highest reading since January 2022,” according to the report.


The full report can be viewed here.

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