Most independent businesses in Canada plan to hike prices in 2024, but the increases won’t be as significant or widespread as previous post-pandemic years, according to a new report from the Canadian Federation of Independent Business (CFIB).

The CFIB’s Main Street Quarterly report, released Tuesday, estimated that on average, businesses plan to increase prices by 3.1 per cent this year – slightly below the most recent read on inflation, which was 3.4 per cent in December.

The CFIB said the increase is “lower than previous years,” adding that the share of firms planning larger increases of five per cent or more is also falling.

“The distribution of businesses’ price setting plans has fluctuated since 2020,” the report said.

The share of businesses planning to increase prices by five per cent or more had dropped to 36 per cent by the third quarter of 2023, the CFIB said. That was down from 60 per cent in the second quarter of 2022, following a “drastic” increase in 2021, according to the organization.

Economic outlook

The CFIB said that despite signs of a slowing economy in the final two quarters of 2023, “growth is nonetheless poised to return” this year, predicting that the economic contraction will be “short-lived.”

However, the CFIB’s data suggested that current economic challenges are impacting private investment plans, which are at their lowest level ever.

“This is mainly driven by very low long-term small business confidence,” the CFIB’s chief economist and vice-president of research Simon Gaudreault said in a written statement.

“Business owners who are feeling rather pessimistic about their future due to general uncertainty, various cost pressures and tax increases weighing on them are significantly less likely to invest in their business.”

With these pressures in mind, the CFIB said the Bank of Canada should consider “loosening its stronghold on interest rates in the coming months.”

Methodology: The CFIB’s research is based on members’ views collected through various controlled access member surveys including “Your Business Outlook,” a monthly CFIB tracking survey that covers small business confidence, expectations, and operating conditions.

Findings are typically based on several hundred responses from a stratified random sample of CFIB members. Forecasts are based on CFIB data collected via the Your Business Outlook survey, a data set that is available the same month it is collected.