Deflation ‘drives down’ small business costs

Deflation is driving down the cost of running a small business for the first time in years, a new study has found.

According to the More Than Business inflation guide, costs fell by nearly 3% in the final three months of last year. The decline has been attributed to the sharp fall in fuel prices, down 18.3%, and raw material costs, down by almost 12%.

Manufacturing costs dropped by 4.3% while contractors saw a 4.5% fall, researchers revealed.

Mike Bowman, head of More Than Business, said the findings were mixed news for business. ‘Small businesses now have to quickly adjust to this deflationary environment with some benefiting more than others.

‘Deflation will come as good news for transport and haulage contractors as they will see fuel costs come down due to a sharp fall in oil prices. However, deflation is bad news for businesses that have their assets tied to property or large amounts of stock already purchased as it will be losing value day by day.’