CPI Preview: Small Businesses Struggle as Inflation and High Rates Bite Main Street

Wall Street Booms, Main Street Breaks: Small businesses across the U.S. are sounding the alarm as rising inflation and high borrowing costs squeeze operations, even as Wall Street continues to post record profits. Many entrepreneurs are struggling to keep up, facing increased costs while larger corporations thrive, leaving Main Street feeling the pinch.


December CPI: A Murky Picture

The Labor Department is set to release the December consumer price index (CPI) on Tuesday, which is expected to show inflation remaining above the Federal Reserve’s 2% target. However, disruptions caused by the 43-day government shutdown last fall may cloud the data for months to come.
Preliminary forecasts suggest headline inflation rose around 0.3% in December compared with the previous month and about 2.6% year-over-year. Core inflation, which excludes volatile food and energy prices, is expected to show similar gains. Yet the shutdown’s disruption of in-store price surveys and data collection means these numbers could be skewed lower than actual price increases.


Housing Costs Masked by Methodology

Housing data, particularly rent and owners’ equivalent rent, is likely the most affected. Because the Bureau of Labor Statistics measures these on a six-month rolling basis, the carry-forward methodology used during the shutdown implied little to no change in housing costs between April and October—masking real price pressures. Seasonal factors, such as heavy holiday discounting during November, may have further contributed to an artificially low reading.


Inflation Bias Could Persist Through Spring

Economists caution that this downward bias in CPI data could persist through April 2026, delaying a clear picture of inflation trends. Even as some adjustments may occur over time, it is difficult to predict when the true impact of rising prices will be fully reflected.

Main Street Feels the Pinch

The ongoing squeeze on small businesses comes at a time when many Americans are already feeling the burden of elevated costs, particularly in housing, energy, and everyday goods. As inflation remains stubbornly high, the challenges for Main Street are unlikely to ease anytime soon, even as broader economic indicators continue to show growth.