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A shop holds a sidewalk sale in Providence, R.I., on Feb. 10, 2023.David Goldman/The Associated Press

U.S. small-business confidence slipped to the lowest level in more than 11 years in March amid rising concerns about inflation, according to a survey on Tuesday.

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index fell 0.9 point to 88.5 last month, the lowest level since December 2012. It was the 27th straight month the index was below the 50-year average of 98.

Twenty-five per cent of owners reported inflation was their single most important problem in operating their business, reflecting higher input and labour costs, up 2 points from February. The share of businesses raising average selling prices rose 7 points from the prior month.

That aligns with a pick-up in consumer prices in the first two months of the year. Price increases were prevalent in the finance, retail, construction, wholesale and transportation sectors. There was also an increase in the share of businesses raising compensation even as demand for labour is cooling.

The NFIB reported last week that hiring plans among small businesses in March were the weakest since May 2020.

Nonetheless, small businesses in the transportation, construction and services industries are experiencing an acute shortage of workers, both skilled and unskilled.

The government reported last week that the economy added 303,000 jobs in March, with the unemployment rate falling to 3.8 per cent from 3.9 per cent in February.

It is expected to report on Wednesday that the consumer price index rose 0.3 per cent in March after advancing 0.4 per cent in February, according to a Reuters survey of economists. The CPI is expected to have increased 3.4 per cent year-on-year in March after advancing 3.2 per cent in February.

Inflation remains above the Federal Reserve’s 2 per cent target.

The U.S. central bank is expected to start cutting interest rates this year, though the timing is uncertain. The Fed has kept its policy rate in the 5.25 per cent-5.50 per cent range since July. It has raised the benchmark overnight interest rate by 525 basis points since March, 2022.

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