Inflation key issue impacting small business: Former SBA Administrator

Former Small Business Administration head Linda McMahon argued on Thursday that small businesses are "'impacted most by inflation," which sits near 40-year highs. 

Speaking with "Mornings with Maria" on Thursday she detailed how small business owners "are really being hurt" by the price hikes, noting that "inflation makes their cost of goods higher."

"They try to pass those costs onto consumers, but consumers can only absorb so much," she continued, pointing out that even if consumer wages increased, "inflation is eating away at that and they are really in a negative position."

The Labor Department revealed earlier this month that average hourly earnings rose by 5.5% year-over-year in March, down slightly from 5.6% the month before. The data comes amid surging inflation, which sits near 40-year highs. 

Inflation cooled on an annual basis for the first time in months in April, but rose more than expected as supply chain constraints, the Russian war in Ukraine and strong consumer demand continued to keep consumer prices running near a four-decade high. 

INFLATION SOARS 8.3% IN APRIL, HOVERING NEAR 40-YEAR HIGH

The Labor Department said earlier this month that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 8.3% in April from a year ago, below the 8.5% year-over-year surge recorded in March. Prices jumped 0.3% in the one-month period from March.

Those figures were both higher than the 8.1% headline figure and 0.2% monthly gain forecast by Refinitiv economists.

The slight slowdown in inflation last month came as energy prices declined 2.7%, driven by a 6.1% drop in gasoline (which had climbed a stunning 18.3% the prior month as a result of the Russia-Ukraine war). 

Still, price increases were widespread: Food prices have jumped 1% over the month, marking the 17th consecutive monthly increase for that index. The largest monthly increases were in dairy (2.5%, the sharply monthly increase since 2007), meats, poultry, fish and eggs (1.4%) and cereal and bakery products (1.1%). 

"When you look at the cost of gas, the cost of groceries, the small businesses are really being hurt by all of these," McMahon noted. 

On Thursday, the national average for a gallon of gas was $4.58, an increase from the day before and a new record high.

McMahon also pointed out that" there are still 11 million job openings that remain unfulfilled with small businesses."

She explained that small business owners "are having a really difficult time hiring workers," even though the majority have raised wages to retain workers. 

"And 61% have said that they are looking for more people to come in and they can’t find them," she added. "So it’s really a tough situation for small businesses." 

The National Federation of Independent Business (NFIB), a small business advocacy organization, detailed inflation’s impact on small businesses last week, after the latest inflation data was released. 

NFIB Vice President of Federal Government Relations Kevin Kuhlman said in a statement that "small business optimism is now at its lowest level since April 2020, while most Main Street employers report that inflation is substantially impacting their business."

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NFIB’s recent monthly survey revealed that nearly a third of small businesses reported inflation as their single most important business challenge. The survey also revealed that owners expecting better business conditions in the next six months dropped to the lowest level on record, according to NFIB.

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FOX Business’ Megan Henney contributed to this report.