Small firms are raising prices to ease pressure of costs

SMALL and medium-sized manufacturers have sharply raised the prices of their goods to try to tackle the strongest cost pressures in more than 20 years.

A CBI survey published today revealed that on top of the difficult economic climate, demand for goods from SMEs has fallen. But despite this, job numbers are growing in the sector, and the smallest firms have been particularly active in hiring staff.

During the three months to April, 51 per cent of respondents to the CBI survey said their average unit costs had gone up. Just 7 per cent said they had decreased.

The resulting balance of +43 per cent is the strongest in more than 20 years, driven by much higher energy and raw material costs.

And SME manufacturers are now passing on these growing cost pressures to customers.

A balance of +20 per cent of firms raised domestic prices over the last three months, the strongest rise since April 1995 and a similar number expect to do so in the coming three months.