Inflation remains a headache for small business owners

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Inflation remains a top concern for small businesses, which reported lower optimism in February. The National Federation of Small Business Optimism Index fell to 89.4 in February, the 26th consecutive month below the 50-year average of 98.

FILE - A shop holds a sidewalk sale on Feb. 10, 2023, in Providence, R.I. Inflation remains a top concern for small businesses, which reported lower optimism in February. NEW YORK — Inflation remains small businesses’ chief worry, according to a new survey showing their optimism fell in February.

The National Federation of Independent Businesses’ Optimism Index fell to 89.4 in February. It’s been below the 50-year average of 98 for 26 straight months. Twenty-three percent of small business owners said inflation was their top problem, up three points from January, when labor quality was the chief concern.

Inflation remains elevated. Prices rose 0.4% from January to February, up from the previous month’s 0.3% pace, the Labor Department said last week. Compared with a year earlier, consumer prices rose 3.2% last month, slightly higher than in January. Excluding food and energy prices, so-called “core” prices also climbed 0.4% from January to February. That’s faster than what’s needed to bring inflation down to the Fed’s 2% target. Core inflation is watched closely for a read on where inflation is likely headed.

As they grapple with inflation, small business owners are spending less. Fifty-four percent of owners reported capital outlays in the last six months, down five percentage points from January. Of those making expenditures, 35% reported spending on new equipment, 23% acquired vehicles, and 15% improved or expanded facilities.

 

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