Inflation is rising to record levels, forcing small businesses to raise their prices. (iStock)

The rate of inflation rose in 2021 and rose faster between March and September than ever before in 2020, according to data from the US Bureau of Labor Statistics (BLS). In addition, inflation more than doubled its peak of 2020 for at least five straight months in 2021.

The latest BLS update showed that the index of consumer prices (CPI), a measure of inflation, rose 6.8% annually in November. As a result, small businesses are forced to raise their prices

A study by found that 82% of small businesses had to raise their prices for products or services in response to high inflation. About 11% of small businesses said they needed to raise prices 10%, nearly half (44%) had to adopt a 15% increase and 45% of small businesses said they needed to raise prices 20%.

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Bottlenecks in the supply chain lead to a struggle for small businesses

About 92% of the small businesses in the study said the cost of supplies or services has increased since the COVID-19 pandemic began, with most (71%) reporting an increase of at least 20%.

Small businesses are also struggling with supply chain bottlenecks. 64% say they cannot purchase products or provide services. Another 56% said they couldn’t meet customer demand and 43% are forced to change their products completely.

The Federal Reserve could soon try to fight inflation by changing its monetary policy and raising interest rates. If high inflation is a drag on your wallet, when interest rates are low, consider taking out a personal loan to pay off high interest debts and reduce your monthly payments. Visit Credible to compare multiple lenders at the same time and choose the interest rate that suits you best.


Small business financial health at risk

Economic activity was stifled after the outbreak of the COVID-19 pandemic when states were locked down and home stay orders were abandoned by government officials. During that time, around 41% of small businesses had to temporarily shut down, according to a study by the United States’ Proceedings of the National Academy of Sciences.

Almost 2% of small companies also stated that they had to close permanently due to a hardship caused by the pandemic.

Now small businesses are having to cope with the effects of price increases and many entrepreneurs are concerned about the financial health of their businesses. According to the study, around 60% of small business owners said they were concerned about the financial health of their business because of higher inflation. Another 47% reported falling profit margins due to inflation since the pandemic began, and 37% said their customers have complained about inflationary prices.

If you are concerned about the rate of inflation and its implications, consider taking out a personal loan to pay off debt. Contact Credible to speak to a credit professional and get all your questions answered.

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