More Small Businesses Say Price Hikes Ahead
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That’s the percentage of small business owners who plan to increase customer prices in the next six months, compared to 30% who said they would in the fall, according to a new survey.
Higher operating costs are among the reasons for the imminent rise in prices, even as hiring remains slow, PNC said in its Economic Outlook Survey published Monday. A record-low proportion of businesses, 7%, expect to increase the number of full-time employees in the next six months, while almost 50% of small businesses say they are already facing challenges to stay open as the pandemic-battered economy struggles to recover.
"Business owners indicated that they will have to cope with these challenges in two ways that are potentially harmful for the broader economic recovery, slowing the rate of hiring and increasing prices for their customers," PNC Chief Economist Gus Faucher said in a statement.
Price increases, or inflation, aren't entirely a bad thing. In fact, the Federal Reserve has a target of 2% inflation for a healthy economy. But economists are starting to warn inflation could accelerate too much if the latest stimulus relief package doles yet more cash to the public.
The owners of 500 small- and mid-sized businesses with self-reported revenue of $100,000 to $250 million were interviewed for the survey between Jan. 2 and Feb. 2.