Small Business Inflation Reaches Crisis Level, Hitting Arizona Hardest

Small businesses in Arizona are struggling to beat inflation more than anywhere else in America, a financial expert has revealed. The study from Lido.app examined challenges facing small companies across all 50 states, tracking employment figures, wage shifts, utility expenses, and price jumps between 2020 and 2024 to measure inflation’s impact.

Arizona placed last overall with a 28.80 score. Local businesses have been hurt by electricity costs rising by 27.74% and commercial gas prices exploding by 75.83%. This, combined with the 54% property value increase, has meant small businesses within the state are struggling with inflation the most.

Idaho ranked second from the bottom, scoring just 31.46 after losing a troubling 7.85% of its workforce. Combining this with a median wage increase of 44%, and utilities rising by around 27%, has really put the strain on businesses within the state.

Maine landed third to last with 31.63 points after suffering the nation’s worst commercial electricity hike at 70.80%, and property prices surging by 60%, has caused operating costs to skyrocket for many small businesses.

Florida came next with a 32.80 score despite its business-friendly reputation. Property values there jumped 61.28% since 2020, the steepest housing increase nationwide, squeezing small business owners financially from every direction.

Georgia rounds out the bottom five, placing 46th across the U.S. with a score of 36.67. The cost of electricity rose 22% in the state, whilst house prices jumped by 55%, one of the highest leaps in the country.

Table: The five states where small businesses are most impacted by inflation

On the other end of the scale, North Dakota is the state faring best against inflation, taking the top spot with a remarkable 86.86 index score. Local businesses benefited from commercial electricity costs dropping 19.75% while wage growth remained at just 13.78%. Business owners found breathing room while their counterparts elsewhere suffered soaring expenses that threatened their survival.

Wyoming secured second place with 74.12 points. The state’s independent businesses continued making money despite facing a 34.04% spike in commercial gas prices since 2020. A 2.99% drop in commercial electricity costs gave Wyoming entrepreneurs an edge over other states.

Hawaii took third place with 69.45 points. Island businesses showed remarkable strength, despite electricity costs jumping 19.68% and gas bills rising 38.29% since 2020 employment grew by 3.38% as an additional 46,000 residents entered work.

Alaska earned fourth place with 66.82 points and boasts the highest median wage among top performers at $28.56. Employment within the state grew by almost 3% as 25,000 people entered work. This, combined with a percentage increase in gas costs of just 7.97%, the third lowest across the nation, led to Alaska’s strong ranking.

Iowa rounded out the top five with 65.13 points after showing steady improvement across all key measures without any wild swings. Notably, the state did benefit from the cost of electricity remaining the same throughout the five-year period.

Table: Top five states where small businesses are least impacted by inflation

Mary Tung, CEO of Lido.app, said: “These results show how unevenly inflation hits different parts of the country. Small businesses in states like North Dakota have room to absorb rising costs, while those in Arizona and other bottom-ranked states face much bigger challenges.

“What’s particularly striking is how some typically expensive states like Hawaii have maintained stable environments for small businesses during this inflationary period. This suggests inflation resilience isn’t just tied to a state’s baseline cost structure.”