August 2024
Small Business Checkpoint: Inflation continues to raise rent
Rental pressures are growing for retailers, especially in the South, but also for small businesses with lower revenues.
Key takeaways
- Inflation remains a top concern for small businesses, and has been noticeably persistent in rent payments. According to Bank of America internal data, rent payments per small business client increased 11% year-over-year (YoY) in July, twice as high as rent of shelter inflation reported in the Consumer Price Index (CPI) report.
- Higher rent can cut into profit margins, especially for small businesses with smaller revenues. In fact, those with revenues <$500K which includes microbusinesses, not only have seen an acceleration in rent payment growth but also a decrease in their inflow-to-outflow ratio, which we view as a proxy for profits.
- Across industries, small businesses in the retail sector have experienced the greatest increase in share of rent in total payments. More specifically, those in the South paid around 25% more in rent payments in July than the 2019 average, likely in part reflecting recent domestic migration trends.
Read our full analysis for a more in-depth look at these trends.
Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.
