While small business owners still see inflation as their greatest challenge, fewer are raising prices to keep pace with the costs of doing business. The NFIB Small Business Optimism Index rose 0.4 points in July to 89.9. Still, even with the uptick, small business owners’ confidence remains low.

The July results mark the sixth consecutive month the index stayed below 98, the average over the 48 years since the small business association began collecting data from small business owners. The survey showed that 37% of business owners saw inflation as their greatest worry in July, a 3-point rise from June. This marked the highest level of concern since the end of 1979.

“The uncertainty in the small business sector is climbing again as owners continue to manage historic inflation, labor shortages and supply chain disruptions,” NFIB chief economist Bill Dunkelberg said. “As we move into the second half of 2022, owners will continue to manage their businesses into a very uncertain future.”

Still, the number of business owners who plan to raise prices dropped by 12 percentage points, to 37% after seasonal adjustments. The percentage of owners who did raise average selling prices in July decreased 7 percentage points to a net, seasonally adjusted 56%. The NFIB said the decline is significant but that the number of businesses raising prices remains inflationary.

Respondents’ outlook on business conditions over the next six months rose in July, though that follows a six-month skid from January to June.

Forty-nine percent of owners reported job openings they could not fill in July, a percentage point down from June but historically very high. NFIB’s monthly jobs report found that 48% of owners raised wages in July and a net 25% plan to raise compensation over the next three months. Labor costs ranked as the top problem for 9% of owners, while 21% said labor quality was their top problem, second to inflation.

“Hiring has never been harder for small business owners,” Dunkelberg said. “The labor shortage remains frustrating for many small business owners as they continue to manage inflation and other economic headwinds. Owners are adjusting business operations where they can to help mitigate lost sales opportunities due to staffing shortages.”