Sixty-one percent of small businesses say they raised their prices at the start of 2022. The poll was taken by the National Federation of Independent Business. That’s the highest percentage in almost 50 years – 1974. The increase coincides with a historic 7.5 percent rate of inflation reported in January 2022 by the Bureau of Labor Statistics.
The overall rate of inflation is spurring price hikes for some small businesses. “If we did not raise our prices, we would have worked just as hard as the prior year and made less money because inflation would eat away our profit,” Wendy Barlin, CPA and founder of About Profit, a tax strategy firm based in Staten Island, told The Epoch Times. Her company raised fees 10 percent for 2022.
Much of the price increase can be attributed to what companies need to spend on supplies. “We had to raise our prices within the last 12 months for a few reasons, the primary of these being our incurred costs have also increased,” Jacob Shirar, president and CEO of Rocky Mountain Finishes, a small business in Craig, Colorado, says.
“We’re often asked to not only finish the products but to also supply them,” Shirar explained. Supply chain issues have led the price of building goods to climb, and Shirar has seen building materials for his company go up at rates between 12 percent and 20 percent over the past year.
“Even things like paints and stains, and the internal resins and pigments that give them their colors, have increased around 10 percent year-over-year,” he added. “We just can’t absorb those costs.”
Customer reactions have varied. In Barlin’s case, clients were understanding of the price increase, she explained. For Shirar, there’s been no major impact on the volume of sales. The overall profit, even with the higher prices he’s charging clients, hasn’t changed. As he explained, “We’ve just had to spend more to make the same.”
Customers’ response to the price hike has been negative. “We have found the sales of this product drop by almost 50 percent, hearing from many customers that they are scouring the Internet looking for cheaper prices from companies that still have stock of their old inventory,” Jeff Moriarty, marketing manager at a health food store said.
The Biden administration has been criticized by economists for policies that are severely damaging key components of the nation’s economy. Some say it will take a decade or more to recover.
–Wire services