The most recent inflation data has made clear that prices are still rising, and far too quickly. But American business owners and policymakers are grappling with a thornier question: Are high energy costs a temporary nuisance to wait out, or a long-term economic reality that calls for price hikes right now?

The answers have important implications for the U.S. economy.

This week, the Federal Reserve is widely expected to raise interest rates in an attempt to slow inflation. But much will also be determined by decision makers pulling their own economic levers. Some businesses are holding their ground, partly on the belief that external price shocks will calm down sooner rather than later. Others are convinced that high energy costs and trade-war volatility have become entrenched features of the economy, and say they no longer have the wiggle room to keep prices stable.

Melissa Florio and her husband own a company, Ambix Manufacturing, that sells plastic components to power-distribution companies. For months, she expected surging costs to settle down, so she kept her prices low.

But in recent months, oil prices have continued to drive up the price of resin, the chemical substance Ambix uses in its products, helping to prompt a change in her outlook. She no longer views the Iran war as a temporary price shock, but rather a long-term barrier to keeping costs stable.

These days, when Ambix's suppliers raise prices, Florio passes the burden on to her customers. She increased prices this summer between 10% and 21% on all of her products, which include plastic insulators for high-voltage transmission wires.

"We reached the breaking point," she said. "We're not eating that cost any longer."

On the other side of the equation are businesses that believe now is the time to keep prices low: they can beat out their competitors and retain cost-conscious customers. Their margins will recover when inflation recedes, the thinking goes.

In rural Pennsylvania, third-generation farmer Jim Barbour isn't convinced that elevated inflation is here to stay. Barbour, who sells beef, pork and milk, has watched the cost of trucking hay from three counties away rise around 15%. But he's chosen to keep his prices stable and believes that "the Middle East will settle down and things will all come back in line."

"Our fuel situation, in my opinion, is temporary," he said. "It'll be back down once we get things straightened out."

The experiences of Florio and Barbour highlight the challenge of sizing up the true threat of inflation.

"Shocks used to be episodic. You could ride it out," said Diane Swonk, chief economist at KPMG. "Now they're endemic."

At a recent call Swonk held with primarily industry economists, attendees expressed concern that if energy inflation accelerates again, companies that have largely stood pat would likely soon need to start raising prices. "It was one of the scariest calls I've had in a long time," she said.

Since then, costs have risen. Diesel prices crossed $6 a gallon for the first time on Friday. While Trump administration officials have insisted that the situation is temporary, some oil executives are cautioning that the prolonged closure of the Strait of Hormuz-and new threats to another key energy chokepoint in the Red Sea-is now spinning out of control.

Some businesses continue to hold out, nervous about the effect of higher prices on sales. Over a third of wage earners saw a decline in purchasing power between late 2020 and late 2024, according to a recent analysis of data from human-resources company ADP.

Walmart executives said last month the company had cut prices on more than ten thousand items, despite billions of dollars of forecasted fuel-related costs. Chief Executive John Furner told investors the company was making that decision to increase market share and "because customers need us to."

Other firms have changed their tune on pricing as the war and trade uncertainty have dragged on, and as volatile commodity prices have swung back and forth.

In June, soup-maker Campbell's told investors that it anticipated elevated costs would eventually come down. Pricing adjustments, Chief Financial Officer Todd Cunfer said, were "kind of the last resort."

But now Campbell's is hiking prices on more than half of its portfolio. The company tried to cut costs through other means. "Unfortunately," Cunfer said last week, "that was not enough given the extreme amount of inflation."

This spring, executives at Clorox said that though they were considering pricing changes, they were approaching the idea with "a high level of discipline and caution." Since then, the company has said it expects inflation to add another $200 million of costs this fiscal year, more than double the normal amount. As resin prices rise, Clorox is increasing the cost of its signature Glad trash bags.

Mark Zandi, chief economist at Moody's Analytics, said robust profits across corporate America are a sign that most companies may be passing along higher input costs to consumers.

Some people still expect inflation to cool down. But it's hard for businesses to plan on that. "We've been told it was going to happen, and it didn't happen," said Gerald Commissiong, interim Co-CEO of health-tech company DataMeds AI.

At LupinePet, which makes dog collars and leashes using materials sourced from around the world, costs have risen because of tariffs and fuel surcharges. Co-Owner Dave Jensen said he doesn't see inflation cooling anytime soon. The business increased prices on their products 5% this summer.

But Jensen has to be careful: In this consumer environment, he said, potential customers might skip the leash altogether. "We went through the Great Recession. We went through Covid. But I never before had that feeling that I don't know how to price things," said Co-Owner Valerie Jensen.

Business owners like Barbour, the farmer, remain optimistic. At his farm, which also offers glamping, Airbnb stays and a Texas-built smoker barbecue food trailer, he has only raised meat prices once over the last five years. Higher input costs have just meant smaller profits for him.

Ambix, Florio's New Hampshire manufacturing company, had gone three years without raising prices. But the days of viewing price shocks as "blips," Florio said, are over.

"Every day I go, 'dear lord, I don't know how much longer we can take this,'" she said. "When do we retire?"