What’s Driving Rising Business Costs?

After a period of moderating cost increases, businesses faced mounting cost pressures in 2025. While tariffs played a role in driving up the costs of many inputs—especially among manufacturers—they represent only part of the story. Indeed, firms grappled with substantial cost increases across many categories in the past year. This post is the first in a three-part series analyzing cost and price dynamics among businesses in the New York-Northern New Jersey region based on data collected through our regional business surveys. Firms reported that the sharpest cost increases over the past year were for employee health insurance and utilities, followed by business insurance, and goods and materials inputs. Firms expect cost growth to moderate in 2026. Our second post will examine the sharp increase in employee health insurance costs in more detail and show that such rising costs dampened wage growth for some workers. The third post will analyze firms’ pricing behavior in light of these cost pressures, as well as firms’ inflation expectations.