In March, U.S small business owners faced their lowest level of optimism in over 11 years due to concerns about inflation. According to a survey by the National Federation of Independent Business, the sentiment index dropped to 88.5 last month, its lowest point since December 2012. This marks the 27th consecutive month that the index has fallen below the 50-year average of 90.
The main cause of this decline in sentiment was inflation worries, with 25% of business owners citing higher input and labor costs as their biggest challenges. As a result, more businesses raised their average selling prices in March, with a 7-point increase from the previous month. Consumer prices also saw an uptick in the first two months of the year, aligning with these concerns about inflation.
To combat high inflation rates, the Federal Reserve has increased interest rates, with inflation reaching an annual rate of around 9% in the summer of 2022. However, recent data shows that consumer prices are still rising at a faster rate than what was expected by many experts. The latest data is anticipated to be released on Wednesday and is expected to show a decrease in inflation to around 3.4%, still above the central bank’s 2% target.
