Exploring the Impact of Inflation on Small Businesses: Challenges and Opportunities

BY SOFIA CAMPANTE, GRADE 7

Crazy gas prices and high costs for eggs have been huge conversation topics for the past few years. But without the help of communities and people in power, these changes in inflation are going to take a big toll on our local small businesses. With the pandemic’s debilitating effects on these companies and the constantly fluctuating economy, small businesses are suffering. 

Professor Filipe Campante. filipecampante.org

So how does inflation end up impacting these small businesses? According to Professor Filipe Campante at the Johns Hopkins Carey Business School, “The worst thing about inflation, for any business, but particularly small businesses, is that it makes things very unpredictable.” The problem is less about the level of inflation and more about its inconsistency. Since small businesses are, well, small, they have fewer resources. With the inconsistency of inflation, small businesses have to devote energy and resources to not only determining the right prices for their customers, but also how much they should be paying for their resources. 

With the stability of 2018 compared to the chaos of 2020, the transition from 2019 to 2020 is a great example of unpredictability. Western Asset

Campante further states, “Because higher inflation tends to lead to more unstable inflation, it’s probably the worst situation for small businesses.” As of recently however, statistics show that inflation has decreased from 9% to 3.2%, significantly lower than it has been in recent years. Campante says this should be beneficial to small businesses. Lower inflation makes it easier for these companies to thrive. However, inflation rates can change from month to month. The ideal situation for all businesses is for inflation to be low and stable, meaning it will stay low for a longer amount of time.

August 2023 inflation rate forecast. Trading Economics

Concerning the small businesses most beneficial to the economy, Campante explains, “Although it varies, the small businesses that end up thriving are heavily dependent on what areas of our economy are thriving.” The success of small businesses is really up to our choices as consumers and our impacts on inflation. As long as we are choosing to support certain companies, those companies are going to be doing better. 

While we cannot predict the future of inflation or the future of small businesses around the world, it’s important that we keep up with our current data in order to benefit and help these rising businesses. Please encourage your family and friends to make sure your community’s small businesses are thriving.

This article was written during the GWS Summer Writing Workshop. Taught by the GWS Publication Team, the workshop hosted young journalists in grades 1 through 12, each with a passion for writing and learning. Over five weeks throughout the summer, students brainstormed, researched, outlined, drafted, revised, and ultimately produced an article about a topic related to women in business. Learn more about the workshop here.