The CPI Report Showed Slowing Inflation. What Opportunities Does This Present For Small Businesses?
October 11, 2024What Happened
The September 2024 Consumer Price Index (CPI) data indicated a year-over-year increase of 2.3%, led largely by increases in categories like energy and food.
This increase, however, marks a slight cooling from the 2.5% rise in August. It is also the smallest annual inflation increase since early 2021. More so, there were decreases in some categories, like furniture and household appliances, which declined by 4.6% and 2.3%, respectively.
What Does This Mean For Small Businesses
Challenges
While the cooling trend leaves room for hope, small businesses may not be out of the woods yet. High energy costs, along with elevated raw material and transportation costs, will require businesses to spend more on their inputs.
In turn, these high costs may put pressure on small businesses to raise prices, which then may deter price-sensitive consumers. Not to mention, high inflation rates in general often result in lower consumer spending. And when consumer spending slows, the first thing to go is typically purchases on non-essential items. So this could hurt businesses in the retail, entertainment, and dining spaces.
But it’s not all bad news.
Opportunities
Overall, the September CPI data indicates that inflation is stabilizing, and that costs may become more predictable and manageable in the near future. With fewer abrupt price changes, small businesses can make more accurate financial forecasts and potentially maintain stable pricing. Specifically, more stable pricing could result in more loyal customers.
With fewer abrupt price changes, small businesses can make more accurate financial forecasts and potentially maintain stable pricing.
Another positive is tied back to something we mentioned earlier: the declining costs of furniture and household appliances. Small businesses could use this time to upgrade their offices or brick and mortar stores. Either of which could lead to improved employee or customer experiences.
Finally, the CPI data showed a 1.21% decrease in prices of IT hardware, software, and services. Again, this presents an opportunity to upgrade your small business’s tech at a lower cost. Now could be an opportunity to invest in more advanced tools for customer relationship management, accounting, or marketing automation. It could also be a good time to upgrade your website, build an application, or level up your data operations with machine learning and AI processes.
For example, could your site use a refresh?
