Small businesses worry they will be hit hardest by inflation

POSTED: 7th February 2011
IN: Newsroom

Research by Aldermore, the new British bank, shows that small businesses worry that they will be hit hardest by inflation.

Aldermore explains that SMEs say they are increasingly concerned that their margins will be squeezed as the price they pay for goods rise without them being able to pass on those increases to their customers.

80% of SMEs surveyed* said they were concerned that their suppliers were going to force above inflation cost increases on them. At the same time only 45% of SMEs felt that they would be able to increase their own prices.

Comments Phillip Monks, CEO, of Aldermore: "Small businesses are worried that the lack of negotiating clout with both their suppliers and their customers means that they are going to come off worst from the current spate of inflation."

"Big businesses with dominant market shares are going to find it easier to pass on price increases to their customers and wring concessions out of their smaller suppliers. Unfortunately many small businesses don't have that kind of negotiating power.

"Few businesses like inflation but small businesses probably least of all."

Phillip Monks explains that small businesses have worked incredibly hard over the last year to repair and improve their margins so they will be particularly worried if the current levels of inflation do not fall.

Adds Phillip Monks: "Obviously these are not the inflation rates of the 1970s and 1980s but for some sectors such as transport or food manufacturing inflation is already causing serious problems."

The FSB (Federation of Small Businesses) has been calling for the Government to put in place a fuel duty stabiliser - this would cut fuel duty when oil prices rise and increase fuel duty when prices fall. Increases in fuel prices are particularly significant as they can cascade through the economy.

Brent Crude futures recently broke through the $100 dollar a barrel level.


*Research conducted amongst 292 SMEs

Press enquiries:

Phillip Monks
Chief Executive
Tel: 0161 238 5000
Mobile: 07810 585350

Nick Mattison or Catherine Sirikanda
Mattison Public Relations
Tel: 020 7645 3636
Mob:07931 685714

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