Majority of small businesses raising prices due to inflation, study shows
The inflation rate surged in 2021, growing more between March to September than any point in 2020, according to data from the U.S. Bureau of Labor Statistics (BLS). In addition, inflation more than doubled 2020’s highest increases for at least five straight months in 2021.
The latest BLS update showed that the Consumer Price Index (CPI), a measure of inflation, increased by 6.8% annually in November. As a result, small businesses are being forced to raise their prices
A study from business.org found that 82% of small businesses needed to increase their prices for products or services in response to high levels of inflation. Specifically, about 11% of small businesses reported having to raise prices by 10%, nearly half (44%) had to by enact a 15% increase and 45% of small businesses said they raised prices by 20%.
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Supply chain shortages creating a small business struggle
About 92% of small businesses in the study reported seeing cost of supplies or services increase since the COVID-19 pandemic began, with most (71%) reporting an increase of at least 20%.
Small businesses are also struggling with supply chain shortages, with 64% reporting an inability to acquire products or perform services. Another 56% said they have been unable to meet customer demand and 43% are being forced to change their products altogether.
The Federal Reserve could soon attempt to combat inflation by changing its monetary policy and raising rates. If high inflation is affecting your wallet, consider taking out a personal loan while interest rates are low to help pay down high-interest debt and reduce your monthly payments. Visit Credible to compare multiple lenders at once and choose the one with the best interest rate for you.
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Financial health of small businesses in jeopardy
Economic activity was stifled after the onset of the COVID-19 pandemic, when states were locked down and stay-at-home orders were issues by government officials. During that time, about 41% of small businesses were forced to temporarily close, according to a study by the Proceedings of the National Academy of Sciences of the United States of America.
Close to 2% of small businesses, too, reported having to permanently close due to pandemic-related hardship.
Now, small businesses are coping the effects of price increases, and many business owners are worried about the financial health of their companies. About 60% of small business owners said they are concerned about the financial health of their businesses due to higher inflation, according to the business.org study. Another 47% reported decreased profit margins due to inflation since the beginning of the pandemic and 37% said their customers have complained about inflated prices.
If you are concerned about the rate of inflation and its effects on you, consider taking out a personal loan to pay off debt. Contact Credible to speak to a loan expert and get all of your questions answered.
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