Inflationary pressures 'starting to hit small businesses'

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Small businesses are starting to suffer in the face of ongoing inflationary pressures, experts have warned.

According to the Office for National Statistics (ONS), the UK's Consumer Price Index rate of inflation rose from 0.9 per cent in October to 1.2 per cent in November.

This is the highest figure since October 2014, when inflation stood at 1.3 per cent.

Responding to the figures, the Federation of Small Businesses (FSB) said its members have so far managed to absorb the increased costs resulting from inflationary pressures.

However, national chairman of the FSB Mike Cherry said the "effects are now beginning to bite".

"Many small businesses rely on road travel to transport goods, receive supplies and for their staff to get to work so the rising cost of petrol is a major concern," he commented.

Mr Cherry also pointed out that the sustained devaluation of the pound has hit many small businesses hard. 

Indeed, he said recent research by the FSB has showed that in the third quarter of 2016, the number of small businesses citing exchange rates as a cause of rising business costs rose from five per cent to 21 per cent.

"This is happening during a period of domestic economic uncertainty and a whole set of rising business costs such as the National Living Wage, pensions auto-enrolment and changes to dividend taxation," Mr Cherry said.

He added that ministers must focus on measures that help to boost growth and jobs, such as increasing the Employment Allowance and delaying plans such as introducing quarterly tax reporting.

Mike Prestwood, head of inflation at the ONS, noted that the rally in the value of sterling during November slightly eased the inflationary pressure on businesses that import raw materials.

However, he said consumer prices "continued to edge upwards, due mainly to the rising cost of clothing and fuel".