Small Manufacturers Increase Prices
A new study shows that smaller firms are pricing up their products as costs increase.
The CBI in its April SME Trends Survey, highlights the fact that many small and medium-sized manufacturers have had to sharply raise prices under the highest pressures from costs in over 20 years. 20% of firms are reporting an increase in prices over the past 3 months, that’s the highest proportion since 1995 where 32% of firms were raising their prices.
In the three months until April, 51% of SMEs said their average unit costs had gone up whilst only 7% had seen a decrease. The increases are chiefly due to rising raw material and energy costs.
In addition there are reports that the same firms have seen demand for their products fall with export orders falling despite the weaker pound.
During the same period the small businesses had generally taken on more staff but there were differences between the smaller firms taking on staff and medium-sized firms actually making staff cuts.
Commenting on the figures, Russell Griggs, Chairman of the CBI’s SME Council, said:
“The uncertain wider economic climate has resulted in some mixed findings. What is certain is that small and medium-sized manufacturers are continuing to feel the impact of higher fuel and raw material costs, and that they are now having to pass these on to customers.
“While the drop in export orders is worrying, particularly for medium-sized firms, there are some more encouraging signs: smaller firms have been quite bullish about taking on extra staff, and some growth in output is forecast for the months to July.”