CPI Rose Sharply in March, Creating Challenges for Small Businesses
April 13, 2026 | Last Updated on: April 13, 2026
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The Bureau of Labor Statistics announced that annual inflation, as measured by the Consumer Price Index (CPI), rose 3.3% in March, up from a 2.4% increase in February. Much of the increase was attributed to a 21.2% increase of the price of regular gasoline which some analysts have linked to heightened geopolitical tensions involving the U.S., Iran, and Israel. The year-over-year change to fuel oil overall was 30.7%, while electricity costs rose 0.8%.
The University of Michigan's Consumer Sentiment Index, a measure of how consumers view the direction of the overall economy, has dropped by 8.8% year-over-year so far in April. The Personal Consumption Expenditures (PCE) Index, which the Federal Reserve Board uses as a measure of inflation, is also expected to show an increase in March. The BLS will issue the PCE results on April 30.
What This Means for Small Businesses
While the rise in inflation was expected, it still may pose challenges, as small businesses may experience a two-pronged effect: first, the rise in prices may bring them back to 2022 when the country saw the highest inflation increase in 30 years, due largely to the supply chain crisis right after the COVID lockdowns ended. Small business owners that rely on gas-powered automobiles and equipment, as well as those that consume large amounts of electricity (restaurants, healthcare facilities, etc.) may be forced to raise the prices of their products to stay financially solvent.
Second, while the PCE index has yet to release its results, an expected inflation spike could prompt the board of governors to raise the overnight rate, thus increasing the cost of borrowing. Rate hikes may especially sting small businesses looking to borrow, especially after enjoying three consecutive months of rate cuts to close out 2025.
The drop in consumer confidence - as measured by the Sentiment Index – could lead to a drop in consumer spending, forcing retailers and other small businesses to continue to lower prices and offer special sales and discounts, which in turn could hurt their bottom lines.
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