CITY & CORPORATE
Shopkeepers hit by 2.5% quarterly rise in business inflation
28 June 2010 | by The Retail Bulletin
Small shops face 6.70% increase in costs over last yearAccording to the latest edition of the Business Inflation Guide (BIG)
produced by MORE TH>N BUSINESS, Q1 2010 saw shopkeepers suffering one of the
biggest quarterly rise in costs since data was first recorded in 2005.
The sharp increase of 2.5% witnessed between January and March 2010
compounds what were a miserable fina l three quarters of 2009 for shopkeepers
in the UK.
While George Osbourne¹s first budget last week aimed to generate benefits
for SMEs in the longer term, with cuts in small business tax, there is no
immediate relief with small firms impacted by slow growing markets,
continuing difficulties in accessing finance and a VAT increase next year.
In terms of inflation, four quarters of consecutive cost rises means that
shopkeepers¹ costs have increased by 6.70% over the last year. Relating to
the whole of the UK, the BIG shows vehicle maintenance costs and tax
(7.53%), fuel costs (6.3%) and office equipment and furniture (5.8%) have
experienced the biggest increases in price.
Manufacturing companies are shown to be the worst affected by these hikes
with costs rising 2.9% between January and March and 7.6% over the past
Across the regions, small businesses in Northern and Southern England saw
the biggest rise in costs both jumping 2.8%. The Midlands and Wales region
was close behind with a 2.7% increase over Q1. Scotland fared marginally
better with the lowest Q1 increase of 2.4%.
Head of MORE TH>N BUSINESS, Mike Bowman, said: ³These figures do not make
good reading for shopkeepers in the UK. They¹ve already seen revised
forecasts for slower economic growth than originally predicted and these
cost increases will undoubtedly test cash reserves for even further.
³The price of fuel is an ongoing concern. All evidence suggests this is a
cost that is only going to increase, and as we know, for many SMEs transport
is critical to the successful running of their businesses.
Stephen Roper, Professor of Enterprise at the Centre for Small and Medium
Sized Enterprises, Warwick Business School, said: ³Economic recovery looks
set to take longer than expected and shopkeepers are still facing a
challenge in getting financial support from banks. Subsequently, they are
being forced to push up prices for their customers in order to absorb rising
³BIG figures for Q3 and Q4 2009 appeared to show more stability for
shopkeepers with 0.5% and 1.5% rises respectively. This unwelcome 2.5% rise
indicates a return to volatility in the financial climate.
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