Sentiment among U.S. small businesses slid for a third month in March to one of the lowest levels of the pandemic as soaring cost pressures induced the worst economic outlook on record.

The National Federation of Independent Business Optimism Index declined to 93.2, the lowest since April 2020, from 95.6, the group said Tuesday. The March reading was weaker than all but one estimate in a Bloomberg survey of economists. The net share of owners expecting better business conditions in the next six months plunged to minus 49%, the lowest in monthly data back to 1986.

Some 31% of respondents reported that inflation was their biggest operating challenge in March, up from 26% a month earlier and also the largest share since the mid-1980s. The report showed more firms are having greater success raising selling prices — 72% in March after 68% in the prior month.

Just two of the 10 components that make up the small-business optimism index rose last month. The biggest drag on the gauge was the decline in respondents who expect the economy to improve, followed closely by a drop in sales expectations. A net minus 18% of small firms, the worst since May 2020, said they anticipate stronger sales in coming months.

Plans for capital expenditures also deteriorated slightly, the NFIB said. While small businesses had some success in hiring last month, the share with unfilled openings remains close to a record.