November sees record small business price increases due to inflation

The share of small businesses raising their selling prices jumped by an all-time high in November as inflationary pressure continued to impact businesses and consumers, according to a new report by the National Federation of Independent Businesses (NFIB).

NFIB’s monthly report on small business economic trends for November found a 13-point jump in the net percent of owners who reported raising their average selling prices, which was the largest monthly jump in the history of the survey.

That pushed the percent of owners saying they’re raising average selling prices to a net of 34%, which is the highest reading in the survey since March 2023. That’s also well above the monthly average of a net 13%.

Elevated inflation continues to create challenges for small businesses, with recent inflation readings showing that year over year price growth is closer to 3% – well above the Federal Reserve’s target of 2%. 

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NFIB’s small business survey found the largest monthly increase in price hikes by small business owners. (James Carbone/Newsday RM via Getty Images)

The NFIB found that inflation ranked second among the issues small business owners raised when identifying the single most important problem they face in operating their business.

While labor quality issues were the single most important problem in operating their business for 21% of small business owners, 15% cited inflation as the leading problem. 

Labor quality trended down 6 points from October, whereas inflation concerns rose by 3 points, which suggests it’s becoming a more significant issue.

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NFIB found that small businesses are planning price hikes in the next three months. (iStock)

In November 2024, inflation narrowly edged out labor quality as the single most important problem facing small businesses, as 20% cited inflation while 19% said labor quality.

Looking ahead to the next quarter, a net 30% of small businesses reported that they plan to increase prices over the following three months.

Among small business owners who reported higher profits, 51% cited sales volume as driving the profit increase, while 18% cited usual seasonal changes and 12% cited higher selling prices.

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Federal Reserve Chairman Jerome Powell and central bank policymakers are looking to balance the need to lower inflation with supporting a weakening labor market. (Kent Nishimura/Getty Images)

For small business owners that reported lower profits, 27% blamed weaker sales, 16% cited rising material costs, and 12% cited labor costs. 

Additionally, the NFIB Small Business Optimism Index rose 0.8 points in November to 99, remaining above its 52-year average of 98. Six of the 10 components of the index increased, while three declined and one was unchanged.

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An increase among small businesses expecting real sales to be higher was the primary contributor to the increase in the Optimism Index. The net percentage of owners expecting higher real sales volumes rose 9 points from October to a net 15%.