NEW YORK — Persistent inflation continued to pressure businesses across multiple U.S. sectors in the first half of 2026, driving up costs for labor, supplies, insurance and utilities even as overall price increases moderated in some areas.
Small and mid-sized firms in particular reported elevated operating expenses, according to business surveys and economic analyses. Key drivers included tariff-related cost increases on imported goods and materials, higher energy prices linked to geopolitical tensions, and ongoing wage pressures in labor-intensive industries.
Manufacturing and construction firms faced notable increases in input costs, while service providers grappled with rising rent, insurance premiums and professional services expenses. Retailers and transportation companies cited vendor price hikes and fuel surcharges as factors squeezing margins.
The U.S. Bureau of Labor Statistics data showed uneven inflation trends, with some categories cooling while others, such as energy and certain services, remained elevated. Many businesses absorbed part of the higher costs while passing others on to customers, according to reports from regional Federal Reserve surveys.
"Inflation rarely shows up as a statistic inside a small business; it shows up in margins," one industry analysis noted regarding the challenges for small business owners.
Broader economic reports indicated that firms expected cost growth to moderate somewhat in the second half of 2026 compared with the prior year, but pressures persisted. Health insurance and utilities were among the categories with the sharpest increases over the past year.
Tariffs contributed to higher procurement costs for manufacturers using imported components, with some firms reporting double-digit rises in prices for processed materials. Labor shortages in sectors reliant on migrant workers added further wage pressures in agriculture, food processing and construction.
Consumer spending faced headwinds from reduced purchasing power, though businesses with stronger pricing power managed to mitigate some effects. Details on the full extent of impacts across all regions and company sizes remained subject to ongoing data collection.
As of early June, economists and business leaders continued to monitor inflation trends amid geopolitical uncertainties and policy developments. Federal Reserve officials and private forecasters projected varying paths for inflation through the remainder of the year, with many expecting gradual easing in some measures while others warned of upside risks.
Companies across sectors reported adapting through measures such as cost controls and selective price adjustments, according to available surveys. Further details on second-quarter performance are expected in coming weeks.
