Over 50% Of Small Business Owners Will Raise Prices Amid Record Inflation

In January, PNC Bank surveyed small business owners and half of them revealed they expect to raise their prices within the next six months, blaming the pandemic and supply chain woes. PNC surveyed them before the Russian invasion of Ukraine and continued war in the region.

Fifty-one percent of small businesses said that they expect to raise prices within the next six months, while 36% expect price increases by 5% or more. A third of respondents said that supply chain issues have impacted their business, but 60% expected improvement in the next 6 months before the war between Russia and Ukraine began.

“Supply chain problems have been a big contributor to the highest inflation the U.S. has seen in almost 40 years. But it is encouraging that most small businesses see supply chain problems easing in the months ahead,” said PNC Chief Economist Gus Faucher. “The wild card now is how long high energy prices and other inflationary factors due to the Ukraine crisis last.”

Forty-three percent of those surveyed revealed that they have lost staff since the start of the pandemic, adding to the potential strain on the businesses.

“There was concern at that time about rising prices, and that worry has likely intensified now given the rapid increase in energy prices, among other factors,” said Faucher. “They’re [small businesses] raising prices because higher costs are forcing them to.”

Within the 51% saying they expect to increase their prices, 63% responded that the price increases are “because they are attempting to keep up with rising non-labor costs.” Around 16% of those who expect price increases plan to raise them by 10%. Thirty-four percent responded that their prices already went up in the past six months, with 4 in 10 responders hiking prices by 5% or more.

Small businesses were already facing challenges from the COVID-19 pandemic — many of which shut down during the pandemic — even as countries and various regions around the world lifted restrictions and mandates. They also suffered from supply chain difficulties. With the added difficulties of the Russian invasion of Ukraine, it is likely those prices will rise earlier than expected and perhaps higher than expected as well.