Falling inflation not yet benefiting business

by Daniel Jones

Those running a limited company are not yet benefiting from the falling rate of inflation.

According to MORE TH>N's Business Inflation Guide, annual costs for small businesses are increasing by 9.4 per cent, which is double the rate of consumer inflation.

Furthermore, although the rate did fall by 0.5 per cent in the third quarter of 2008 for small firms, margins are also being squeezed by rising labour costs, which is where many companies spend their money.

Head of MORE TH>N BUSINESS Mike Bowman said: "Cost reductions are not filtering down to the small business economy as quickly as they have for consumers."

In related news, Charles Davis, an economist at the Centre for Economic and Business Research, previously claimed that a tax cut or reduction in VAT would help to bring more stability to small businesses in the current economic climate.

Published on: December 11, 2008

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