The independent business organisation, ISME, has said that the latest decrease in inflation "provides little comfort" to overstretched small businesses in Limerick and beyond.

ISME welcomed the reduction in inflation to 4.7% but also warned that small businesses are still facing serious cost increases and while the headline rate of inflation has reduced, this is "masking the true level of business costs, which are rising at an alarming rate".

ISME Chief Executive Mark Fielding said that "the dramatic increase in oil prices internationally has impacted heavily on SMEs".

"While a certain amount of the negative effect of these increases have been sheltered by the strong position of the Euro against the Dollar, the knock-on effects of increased petrol and diesel prices have affected the cost competitiveness of small business, particularly in the manufacturing and distribution sectors. It is no coincidence therefore that the level of goods inflation has increased to 2.7% up from 0.6% at the start of 2007," he added.

He said that while it is difficult to take an external influence like oil into account, "the reality is that the Government continues to have a negative influence on inflation through increases in education, health, local charges and other public sector costs".

"With Irish inflation averaging 4.9% in 2007, well in excess of the EU average, small businesses will continue to suffer both at home and abroad. It is absolutely essential that the headline rate of inflation is brought down to 2% as advocated by the National Competitiveness Council in order to adequately compete," he said.

"The Government has a key responsibility in this area and it is imperative that action is taken to control costs under their remit."

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