Oct. 16—The Federal Reserve announced underwhelming September results from their efforts to combat inflation Thursday as Norman business owners continue to budget for increased costs.

Of the 550 small business owners surveyed by online finance company Kabbage in September, 75% say inflationary pressure has affected their bottom line this past year.

Business owners are seeing little relief from skyrocketing prices as inflation increased .4% in September, according to the latest consumer price index data released Thursday by the Bureau of Labor Statistics. Year-over-year inflation was up 8.2% last month, still near the highest levels seen since the early 1980s, and an indicator that interest rate hikes this year have had a less-than-desired effect on the price of goods.

Monetary policymakers at the Federal Reserve have implemented multiple rate increases this year in an attempt to cool inflation to their 2% target. The Fed increased its federal funds benchmark rate by 25 basis points, or .25%, in March.

In May, June, July and September, the Fed raised the rate .75%. The rate was near zero just seven months ago.

Michelle Meyer, chief U.S. economist at the Mastercard Economics Institute told CNBC the Fed remains committed to easing inflationary pressures. That means additional increases are likely coming before year's end.

"The more inflation comes in above expectations, the more they're going to have to prove that commitment, which means higher interest rates and cooling in the underlying economy," Meyer told CNBC Thursday following the release of the Bureau of Labor Statistics September CPI report.

Ben Keen, associate professor of Economics at The University of Oklahoma, said inflated costs are due to the shift from purchasing services, which became limited during COVID-19, to goods.

With people back to traveling and going out, Keen said the economy switched back to service-focused purchases from goods — a less economically productive, but labor intensive, sector — which reconciles the strong demand for it while having a weak gross domestic product.

The U.S. had two consecutive quarters of negative GDP growth in Quarter 1 and Quarter 2 2022, though strength in the labor market during that time has some experts hesitant to describe the current economic state as a recession.

The local effect

Higher interest rates, along with premiums on new and vehicle purchases due to longstanding production shortages, has made for a busy year for Jimmy Pickett, owner of Norman Automotive.

"We have had more business than we have ever had," Pickett said.

Demand at Norman Automotive is exceeding the availability of parts. Pickett said multiple cars have sat at his shop since the end of 2021 waiting on parts, which on average, have increased around 30%.

"There's a lot of stuff we can't get, or we can't get the quality we're (looking for)," Pickett said.

In the last two or three weeks, Pickett saw many parts increase in price by 20% or more. He said brake rotors have nearly doubled in price this year.

"People aren't buying new cars because they are spending thousands of dollars more this year on basics," Pickett said. "People aren't making any more money, but they're still having to live, so you make cutbacks where you can."

According to the Federal Reserve, the price of motor vehicle parts has increased on average 31.5% since September 2020.

Pickett raised his labor rate in 2021, but with continually rising part expenditures, it's difficult to operate at a sustainable profit margin and keep customers from raising concern over increased repair costs.

While Pickett said he's had to raise the price on some common repairs, he's tried to keep changes to a minimum.

"I've got customers that have been customers with me for 10 to 20 years, and I am not going to lose a customer over my profit margin dropping 10%," Pickett said.

Scotty Jackson, co-owner of Apple Tree Chocolates, said he's seen increases across the board, most notably on fruits and paper packaging.

Fruits and vegetables are up 10.4%, according to the latest CPI data.

"A lot of places, maybe their price only went up 10%, but all of a sudden their (order) minimums have tripled — so you really have to think about, 'alright, well can I get by another couple of weeks, so I can make sure that I can do a big order for that vendor,'" Jackson said.

Daniela Cooper Marr, owner of Coop Cake in Norman, has seen the cost of making desserts increase considerably this year. She's raised her prices 8% in the last three months as a response, but that's still not enough to make up the difference.

For now, the rest comes out of Marr's profit margin. She said she hates raising prices because it affects the choices of customers, but with ingredient costs up across the board, additional price increases for clients may come soon.

According to the latest BLS CPI report, eggs are up 30.5%, and butter and margarine have risen 32.2%.

"I keep thinking butter and eggs are going to go down, but they haven't," Marr said.

Marr switched from using organic eggs to non-organic for her recipes. Quality standards are an important part of her business, but upholding those in recent months has come at the expense of her profit.

Additionally, she's shifted her focus to higher margin orders with intricately decorated cakes while fulfilling less orders involving plain cakes.

"I don't financially project enough, but it's something I'm going to have to do soon," Marr said.