Price Pressures Persist: What Business Leaders Need to Know Now

U.S. inflation expectations have surged, with the University of Michigan reporting a jump in year-ahead expectations from 6.5% to 7.3% in May—the highest in decades . This spike reflects growing consumer concern over rising prices, despite April’s Consumer Price Index showing a modest 2.3% annual increase.

Import prices edged up 0.1% in April, driven by a 0.4% rise in nonfuel goods like capital equipment and consumer products, even as fuel import prices declined 2.6% . These increases coincide with new tariffs implemented in early April, which, while politically contentious, have contributed to cost pressures across supply chains.

Manufacturing sectors report escalating input costs: the Empire State Manufacturing Survey's prices paid index rose to 59.0 in May, its highest in over two years, while the Philadelphia Fed's survey shows firms anticipate a 3.8% increase in their own prices over the next year, up from 3.0% previously. Small businesses are clearly feeling the strain. The NFIB Small Business Optimism Index fell to 95.8 in April, with 14% of owners citing inflation as their primary concern.

The Federal Reserve, acknowledging heightened risks of both inflation and unemployment, maintained its benchmark interest rate at 4.25%–4.5% in May . Chair Jerome Powell signaled a strategic pivot back toward prioritizing inflation control amid ongoing supply shocks. The policy suggests borrowing costs will remain high for the foreseeable future, another headwind for business executives nationwide.

To learn more about how these price pressures can be mitigated, contact Sophic Analytics.