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Great post!
I have never had direct experience with this, however, I purchase from local companies who have increased their prices before. At first, I found it frustrating that my favourite Etsy stores and small brands were increasing their prices but I totally understand from a profit perspective.
I suppose if you increase your prices but add something personalised to the item, it can change the customer's perception. As an example: attach a handwritten note to the items or include a discount voucher - anything to make the customer smile! Of course, weigh this in with your profit and see how it works.
@JJJZ you have had your business for a while, have you ever increased your prices? Or are you wanting to? I would love to know!