Producer Prices and Uncertainty Reset Businesses' Supply Chain Priorities

• CFOs at firms with 40%+ overseas suppliers report nearly double the uncertainty (33%) compared to those with only domestic suppliers (18%), with tariff unpredictability driving supply chain risk.
• Working capital solution adoption reached 85% among U.S. middle-market firms, with AI usage for supply chain efficiency hitting 42% across North America and early supplier payments rising to 41% in Canada.
• Consumer response to upstream price pressures shows 45% of millennials using credit card installment plans and 25% using BNPL services to manage cash flow amid pricing volatility.

Summary

Key Economic Data:

U.S. Producer Price Index (PPI) rose 0.5% in January 2026, with the 12-month increase reaching 2.9%, exceeding expectations. Final demand services surged 0.8%, driven by a 2.5% jump in trade margins, indicating wholesalers and retailers are expanding markups despite softening commodity prices.

Primary Issue:

Rising service margins and tariff volatility are creating significant operational uncertainty for businesses, particularly impacting supply chain stability and threatening consumer price increases even as input costs moderate.

Corporate Impact:

Middle-market firms face heightened risk based on global exposure. CFOs at companies with 40%+ overseas suppliers report 33% uncertainty rates versus 18% for domestically-sourced firms. Goods-producing sectors show particular strain, with nearly 30% of CFOs citing high uncertainty. Among executives lacking tariff adaptation confidence, 54% report elevated uncertainty.

Business Response Strategies:

• Working capital optimization: 85% of U.S. middle-market firms now use working capital solutions; North American index scores increased to 55 in 2025-26 from 52 previously
• Early payment tactics: Canadian firms paying suppliers early rose to 41% from 34%
• AI adoption: 42% of North American firms deploy AI for predictive analytics and demand modeling
• Payment innovation: Commercial/virtual card usage jumped to 17% in Canada from 7% in 2024

Consumer Impact:

Payment flexibility tools gaining traction as costs transfer downstream: 45% of millennials used credit card installment plans recently, while 25% used BNPL services, reflecting household responses to pricing pressures originating in supply chains.