How Nevada small business are dealing with the ‘burden’ of inflation-fueled higher prices

As the manufacturer of Kimmie Candy in Reno, Dutra’s business purchases chocolate ingredients one year in advance. Cocoa beans from Africa – also feeling the effects of inflation – cost roughly $3,000 per metric ton in 2023. In April, the market was up to $12,000, before more recently settling around $7,000.

It’s just one piece of the rising costs that Kimmie Candy and other small businesses are experiencing. Dutra has noticed it in wages, packaging, supplies, transportation and other categories of the business he has run in Northern Nevada since 2006.

“You’re looking at all those things that go into making something that you think is fun and easy, like candy, and all of a sudden, you’ll realize that transportation and fuel are some of the biggest issues for us,” Dutra said. “Even though we don’t pay for it we are charged for it by our suppliers.”

Sticky inflation has been the talk of the last two years in the U.S. economy. For Nevada small business owners, those increases have forced them to trim budgets and push costs onto their consumers.

Rising production costs

Beyond cocoa costs, shipping costs have pressured the business as well, Dutra said. Fuel surcharges imposed by trucking companies can rise to nearly the cost of the original freight.

The Producer Price Index – which measures input costs for businesses such as transportation, goods and other services – rose 3 percent in November compared to the previous year, according to the Bureau of Labor Statistics. It was the largest rise since moving up 4.7 percent for the 12-month period ending in February 2023.

Kimmie Candy manufactures chocolate products under two main national brands: Sunbursts and ChocoRocks. The company acquired Good Day Chocolate, a Boulder, Colorado-based “chocolate with benefits” brand that integrates supplements into vitamin and chocolate products. The company’s products can be found in retailers such as WinCo, Hobby Lobby, World Market Cost Plus and others.

Shipping costs are part of the increases that Randi Thompson has seen in her business. As co-owner of 3D Keepsake Imaging, a prenatal diagnostic imaging service in Reno, she has noticed the shipping price increases in the rising cost of photo paper and stuffed animal keepsakes they sell at the center.

“All those expenses that it takes to operate a facility have increased, and that just puts the burden on the back of small businesses,” Thompson said.

Andrew Woods, director at UNLV’s Center for Business and Economic Research, said wage inflation is also a major area of rising costs for business owners. Workers – who were in short supply immediately after the pandemic – now have higher expectations for their wages, meaning some employers will have to keep up.

Between January 2021 and September 2024, Nevada wages rose on average, $10,166 after inflation, according to a U.S. Joint Economic Committee Report from Senate Democrats.

Thompson said wages are another category in which she’s had to compete. 3D Keepsake Imaging employes four part-time staff, including two ultrasound technicians. They often use the job as an extra source of income while working in nearby medical centers. Since the pandemic, Thompson said their hospital salaries are harder to compete with.

“One of our techs is actually going to go back to full-time hospital work, and she says, I get $72 an hour, and it’s a 12-hour shift,” she said. “I’m like, yeah, you’re gonna make $80 with me, or $800 if you go work at 12-hour shift, so I can understand that.”

Passing the prices on

Dutra said all the operational cost increases lead them to increasing prices. One reoccurring order valued at $120,000 was canceled, he said, when they heard the new prices.

“That equates to quite a bit of an upcharge to the customers,” Dutra said. “The stores, because they’re wanting to make their 30 or 40 percent, we’re fearful that our price increases that we’re having to do now are going to diminish some of our sales.”

Dutra also noted that when manufacturers increase their prices, they may not increase them at the same rate as other cost increases. Instead, they may rise incrementally so customers are less likely to abandon them over a big jump.

“2025 the prices are going to be even higher because what’s happened is, is a lot of people have not passed on all their price increases,” he said. “You have to give people time. I think what ends up happening is we’re going to see a lot of the big chocolate manufacturers passing on a lot of added cost in 2025.”

For Thompson, she said she’s tried to instead cut operational costs by switching to an imaging streaming service with downloadable photos instead of printouts. They’ve also moved to buying in bulk to avoid large shipping fees.

“I think we’ve trimmed all we can – and that’s what we’ve been doing for the past two years, is trying to trim out expenses or excessives,” she said. “We can only raise our prices so much. That’s the challenge. You always think that competition is going to keep prices down, but reality keeps prices down.”

Inflation is expected to still be a problem to watch in 2025. The Federal Reserve cut interest rates on Wednesday, an expected move that is intended to make borrowing costs easier. But Federal Reserve Chair Jerome Powell still noted that inflation was stubbornly higher than the target 2 percent and said further base rate cuts in the new year hinge on inflation.

Despite the expectation of continued high prices, both Dutra and Thompson said they’re optimistic that next year will be easier to navigate than the previous year.

Dutra cited looser regulations expected in the incoming Trump administration and the hope that fuel costs will drop as well, either through policy or through global events.

“We have to bring down the cost of fuel, which will bring down the cost of plastic and transportation,” he said. “And I’m hoping that this administration is more prone to growing the economy rather than letting it sit.”

Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.