Rising inflation is the top concern for small business owners as the Federal Reserve gears up to raise interest rates for the first time in years.
The MetLife and U.S. Chamber of Commerce Small Business Index survey, conducted in late January, found that 85% of small business owners say they are concerned about the effects of inflation on their business, up from 74% last quarter. Almost half of small business owners, 44%, said they are very concerned about the higher prices.
Additionally, 76% of those surveyed said they are finding it difficult to manage higher costs because of inflation, while about 3 out of 4 owners said higher prices have had a significant effect on their businesses over the past year.
Consumer prices rose 7.5% in the 12 months ending in January, the fastest pace of inflation in four decades and a sizable half percentage point increase from December’s number . Prices rose for a wide range of items, including housing, cars, and groceries.
Inflation has not only grown to soaring highs, but it has also increased at a rapid pace. Just less than a year ago, when the Chamber conducted the same survey, only 16% of small business owners cited inflation as a big concern.
Because of the higher prices, nearly 70% of small businesses report they have had to raise their prices, while 41% of owners said they have had to downsize by decreasing staff in order to cope.