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13th May 2008

Manufacturers force to pass rising costs on to customers

Smaller manufacturers are increasing the costs of their goods, in the face of the strongest cost pressures in over two decades.

The Confederation of British Industries (CBI) reported that in the three months to the end of April, 51 per cent of the small manufacturers it questioned said that their average unit costs had gone up.

What's more, 20 per cent more manufacturers said they had been forced to pass these costs on to the customers than said they had dropped prices over the last three months.

Despite this, 12 per cent more small manufacturers said they had hired more staff in the people than said they had been forced to fire people.

Russel Griggs, the chairman of the CBI's SME Council, commented: "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.

"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."
 

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