The data revealed that costs for SMEs fell by 2.9% in the Q4/08, mainly due to the decline in the price of fuel and raw materials. Energy prices dropped over 18% and raw materials almost 12% in the last three months of 2008.
Despite the decrease in the price of goods small firms have been hit by a decline in consumer confidence and spending and the lack of inflation is resulting in a very depressed marketplace.
"Small businesses now have to quickly adjust to this deflationary environment with some benefiting more than others," said Mike Bowman, head of More Than Business.
"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."
Source: More Than
www.ukba.co.uk
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