Small businesses running costs continue to fall
Small businesses across the UK are continuing to experience unprecedented levels of deflation resulting in rapidly declining operating costs. The cost of running a small business has fallen to -1.4 per cent deflation over Q1 2009, according to the latest Business Inflation Guide (BIG) from MORE TH>N BUSINESS.
The sharp decline marks the second consecutive quarter of sustained deflation for the small business community. In Q4 2008 costs plunged to -2.9 per cent deflation. Declining labour, advertising, vehicle and raw material costs have all contributed to the continuing falls in Q1 2009, however, profit margins still remain under huge stress due to low demand for products and services.
Developed in conjunction with Warwick Business School, the BIG is a quarterly index that measures a basket of 20 of the most important expenditure items for small businesses. The index has been measuring the health of the small business economy for the last year.
Now in its fourth quarter, the BIG has recorded one of the most turbulent periods in history for small businesses, measuring record levels of inflation and deflation. For Q2 2008, the inaugural BIG recorded a cost inflation of 9.9 per cent. This eased to 9.4 per cent inflation in Q3, before plummeting to -2.9 per cent deflation in Q4 and -1.4 percent in Q1 of 2009.
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