Small Business Price Increases Hit Record High Amid Inflation Concerns
Sharon Miller, President and Co-Head of Business Banking at Bank of America, discussed the rising costs faced by small businesses and their optimism for 2026 during an interview on “Claman Countdown.”
According to the National Federation of Independent Business (NFIB), the share of small business owners reporting sales price increases reached an unprecedented high in November, highlighting the ongoing effects of inflation on both businesses and consumers. The NFIB’s Monthly Report revealed a 13-point jump in the net percentage of owners reporting price hikes, marking the largest single-month increase ever recorded in the survey.
Currently, 34% of small business owners indicate they are raising prices on average, the highest figure since March 2023, and notably above the usual monthly average of 13%.
Recent inflation data shows nearly a 3% rise in year-over-year prices, which is significantly above the Federal Reserve’s target of 2%.
Growing Optimism Among Small Businesses, Despite Labor Challenges
Interestingly, while inflation remains a major concern, it ranks second as the primary issue for small business owners. A recent survey found that 21% of them prioritized the quality of labor as their top challenge, while 15% pointed to inflation. Although concerns about the quality of labor have decreased by 6 percentage points since October, worries over inflation have increased, indicating a shift in priorities.
Job Losses Reported Amid Tariff Uncertainty
November’s findings showed that inflation narrowly eclipsed labor quality as the foremost issue facing small businesses, with 20% highlighting inflation and 19% mentioning labor quality. Moreover, looking into the next quarter, 30% of small business owners plan to raise their prices in the upcoming months.
When examining profits, 51% of business owners cited increases in sales volume as the primary reason for their profit growth, with 18% attributing it to typical seasonal changes and 12% to higher selling prices.
Private Sector Job Losses Impact Small Businesses
Interestingly, the private sector experienced an unexpected loss of 32,000 jobs in November, according to ADP. Among those small business owners who reported declining profits, 27% attributed the downturn to poor sales, while 16% cited rising material costs and 12% mentioned labor expenses as contributing factors.
On a more positive note, the NFIB Small Business Optimism Index increased by 0.8 points to reach 99 in November, aligning with its 52-year average of 98. Six components of the index improved, while three saw declines, and one remained steady.
The rising expectations from small and medium-sized enterprises for increased real sales volumes played a crucial role in this uptick in optimism. The net percentage of owners anticipating higher sales increased by 9 points since October, now sitting at a net 15%.
