MNI: 'Rampant' Inflation on Main Street in May, NFIB Says

The small business recovery stumbled in May as price gains fueled uncertainty and business owners struggled to fill open roles, the National Federation of Independent Business said Tuesday.

The percentage of businesses raising average selling prices rose four points over April to a net 40%, the small business group said, the highest reading since 1981. Price hikes were most common in wholesale (65%), retail (53%), and manufacturing (47%). Roughly 43% of owners plan to raise prices in the near future, up seven points from April.

"Inflation on Main Street is rampant and small business owners are uncertain about future business conditions," NFIB Chief Economist Bill Dunkelberg said in a statement. Owners expecting better business conditions sometime in the next six months fell 11 points to a net negative 26%.

Some 7% of businesses reported higher nominal sales in the past three months, up from 3% in April, but just 3% expect higher real sales volumes, a historically weak reading, the NFIB said.

A lack of available workers is "holding back growth for small businesses across the country," Dunkelberg said. "If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-Covid levels."

A record-high 48% of business owners reported unfilled job openings in May, and more than 30% of businesses reported raising compensation in May, the most in a year. Some labor market experts have said employers must offer higher wages to entice hesitant workers back to the market. More than 20% of businesses surveyed by NFIB said they plan to raise compensation in the next three months.

The NFIB small business optimism index fell 0.2 points in May to 99.6, reflecting a "slight pause" in the recovery of small businesses, and the first decline in the index since January.