Updated: Nov 14
Fresh numbers from the latest Consumer Price Index from the Bureau of Labor Statistics shows that inflation remains little changed at 3.2% year-over-year. Food prices, however, spiked up 3.3% in the last twelve months as businesses were forced to pass along some of the cost of goods onto the customers.
This spike confirmed the growing concern from small businesses owners that high inflation is going to persist over the coming six months, according to the October Freedom Economy Index. This new survey data from a sampling of over 70,000 small businesses reveals that 87% of small business owners expect high inflation to persist over the coming 6 months.
87% of small businesses say inflation will persist higher in the next 6 months
76% report their supplier prices have risen over the past 30 days
72% say their supplier prices have risen by 10% or more in the past year. 35% say of these say their supplier prices have actually jumped by 20% or more in the past year.
52% say they’re absorbing some cost and passing some on to consumers
23.5% say they’re passing 100% of the increase to consumers.
“Small businesses are on the front lines of our economy, and they feel the weight of inflation more than any other segment,” said RedBalloon CEO Andrew Crapuchettes. “Inflation has rocked the world of small business, and they’re seeing prices jump far more than the producer price index is reporting.”
"The sharp increase in supplier prices is just of the many challenges small businesses face in today's economy,” said Andrew Crapuchettes. “These rising costs are forcing small businesses to adapt and find ways to stay competitive, unfortunately this means that they have to pass along these increases onto the consumer."
Inflation & Federal Policy Concerns
Despite aggressive interest rate hikes from the Federal Reserve, small business owners remain skeptical that inflation levels will come down any time soon. Verbatim responses from these employers underscore their uncertainty and express concerns about potential hyperinflation if the current economic trends persist.
"Inflation will reach levels never before witnessed in U.S. history."
"It's affected my business."
Small business owners attribute the inflation surge to the federal government's substantial COVID-related spending and the perceived slow response of the Federal Reserve in adjusting interest rates. Sample verbatim responses highlight their concerns:
"Printing $5 trillion in a few years is a pretty obvious direct cause."
"We MUST start budgeting correctly and stop all these stop-gap budgets every few months."
"It was caused by DC overspending and shutting down our U.S. oil and gas production."
"Inflation was caused by reckless COVID stimulus, interest rates being too low for too long, and general financial recklessness."
"The inflation spike was largely caused by Biden's actions around the energy industry."
Notably, 62% of respondents believe that Congress should prioritize addressing the spending and debt issue by putting all other legislative work on hold.
Furthermore, a substantial 78% of respondents express concerns that the Federal Reserve's inflation-fighting strategy may lead to a recession, potentially resulting in job losses and business closures.
"The interplay between federal policies, such as COVID-related spending, and the Federal Reserve's response to interest rates, is a complex challenge,” Crapuchettes said. “Small business owners are rightly pointing out these factors as drivers of inflation, and it's time for our leaders to address these concerns."
The message from America’s business community is clear – inflation is still hurting their business and believe that runaway government spending has a huge part to play in it.
If there’s going to be any hope for the economy going into 2024 then Congress should listen to these major concerns and take decisive action soon.
The monthly Freedom Economy Index is a joint project of PublicSquare and RedBalloon.work. The October 2023 survey sampled a universe of over 70,000 small businesses from October 25-30, with 905 respondents and a 3% margin of error at the 95% confidence level.
Download the full October report here.