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Small Firms Raising Prices

More owners cite inflation as their biggest concern, a recent survey shows.
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As higher costs and weaker sales continue to put upward pressure on prices, more small-business owners say they're worried about inflation, the National Federation of Independent Business reported this week.

Based on a survey of its members nationwide, the Washington-based lobby group's monthly small-business optimism index rose by nearly two points last month to 91.5, below its benchmark level of 100. Seven of ten index components improved in April, including plans to increase employment, spending and inventories in the months ahead.

Despite the gains, more owners reported raising prices last month amid higher costs and weaker sales. Overall, the number of owners citing inflation as their biggest concern in April rose to its highest level since 1982.

"Recession fears are spreading and the economy is showing definite signs of slowing, even on Main Street," William Dunkelberg, the group's chief economist, said in a statement.

He said price increases last month were not enough to counter weak earnings and "backdoor inflation" from higher compensation costs. "That is a bad-news environment for profits," Dunkelberg said. 

Last updated: May 13, 2008




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