Small firms face stiff cost pressures

Small businesses are paying out around 10 per cent more for goods and services than they were this time last year – double the general rate of inflation.

The facts:

The newly launched ‘business inflation guide’ by Warwick Business School for More Th>n Business shows that prices jumped 9.9 per cent in the last 12 months.

The figure is almost twice that of general inflation because of the specific things – such as raw materials, petrol and staff wages – that small businesses have to fork out for.

In the second quarter of this year alone prices leapt 3.4 per cent and according to the study the smallest UK businesses are being hit hardest.

More Th>n found discrepancies between business sectors as well as regional differences in cost pressures.

At 11.9 per cent inflation over the year, manufacturers are facing higher prices than service sector businesses, while Scottish firms faced the lowest regional price increases, yet were still paying 8.5 per cent more than in 2007.

They said:

Mike Bowman, head of More Th>n Business, said: “Now that we have a true picture of rising costs for small businesses, people will be asking the government what realistic measures can be taken to support them, particularly in the current economic climate.

“When costs are rising small businesses really should leave no stone unturned in the search for savings. The top priority should be to review all suppliers and negotiate on prices and payment terms - particularly with regard to energy suppliers and other important cost items.”

We say:

This confirms what we all know: inflation is rising and it is the items that small businesses rely on that are increasing at the quickest rate.

Thankfully, the Bank of England’s projections show that inflation will slow towards the end of the year and will head back towards the Bank’s two per cent target in 2009.

That will relieve some cost pressures and as a bonus increases the chance of an interest rate cut soon.

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By News Desk  on   Sep 29,2008

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Keywords

small businesses    inflation    prices    cost pressures    products    insurance   

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Sian
Great Article Report Abuse