Jan. 17, 2005 -- A mixed report from the National Federation of Independent Business found that 30 percent of owners planned to increase prices in the next three months, making it the highest figure in six months. The owners cited higher costs of overhead and fears of inflation.
Meanwhile, the report noted the NFIB Small-Business Optimism Index has held strong. Though the index fell from November's high of 107.7, it ranked third highest ever at 106.1 for December. In keeping with such optimism, a historic 38 percent of owners plan to make capital expenditures in the next few months. Overall, 37 percent of small business owners expect business conditions to improve in the next six months, down from 47 percent in November.
Whether these firms raise their prices is another matter, noted William Dunkelberg, chief economist at the NFIB, pointing to the discrepancy between the number of firms that planned increases last year, 29 percent, and those that actually made them, just 15 percent.
However, small businesses may need higher prices to offset anticipated costs. On Monday, the NFIB released a report noting that 29 percent of small companies plan to expand their business in the next three months. Of the 411 firms surveyed, 21 percent reported increased hiring, the highest figure ever reported, and 19 percent plan to keep hiring.
Meanwhile, the Federal Reserve is expected to step up rate increases to slow inflation, therefore quelling the fears behind the planned price increases.