Dive Brief:

• Surging energy prices last month pushed down optimism among small businesses to the lowest level since October 2024, the National Federation of Independent Business said Tuesday in a survey report.
• “More small business owners are struggling with significant and unpredictable hikes in fuel prices, which are more challenging for small businesses to pass on to their customers compared with their larger corporate competitors,” NFIB Chief Economist Bill Dunkelberg said in a statement.
• Job openings and hiring plans fell to the lowest level in six years, and 14% of small business owners identified labor costs as their top problem, the highest reading since the start of the survey in 1973, the NFIB said.

Dive Insight:

Inflation has sped up in the past several months, spurred by the highest tariffs since the 1930s and a sudden plunge in the supply of oil after the U.S. and Israel launched air strikes on Iran in late February.

Futures for Brent crude oil, the global benchmark, have surged by about 31% since the Feb. 28 start of the war, from $70 per barrel to $91.67 per barrel. In turn, the average price for a gallon of regular gasoline has soared from $2.91 to $4.16, an increase of 43%, according to AAA.

“Gas prices remain well above where they were before the conflict in the Middle East, and those costs don't stay at the pump – they move quickly through supply chains, vendor pricing and freight,”  Mark Valentino, head of business banking at Citizens, said Tuesday in a note.

Also, amid higher prices, the federal government has been slow to reimburse companies for tariffs deemed illegal, he said.

“Conditions for small businesses have not eased,” Valentino said. “Consumer confidence is near a historic low, sales are slowing and margin pressure is returning.”

Small businesses may play a part in stoking inflation in the months ahead. The net percent of business owners planning to raise average selling prices rose to 34%, the highest level since July 2022, the NFIB said.

At the same time, expectations for sales among small businesses fell to the lowest level since April 2025, the NFIB said.

Expectations among consumers also worsened last month, the Federal Reserve Bank of New York found in a survey.

Consumers’ perceived probability of losing a job rose in May above the average of the past 12 months, while their perceived probability of securing a new job slumped to the lowest level since December 2025, according to the New York Fed.

Also, households’ perception of their current financial situation compared to a year ago deteriorated, as did their expectations for their financial condition one year ahead, the district bank said Monday.