Retailers' profit margins still remain under "huge stress", despite the fact the cost of running a small business has fallen in the past 12 weeks.

New figures from the More Than Business Inflation Guide show that the cost of operating a small company fell by 1.4% in the first quarter of 2009, following a 2.4% fall in the last quarter of 2008. This is down to lower costs in labour, running a vehicle, advertising and raw materials.

More Than Business head Mike Bowman said "The volatility has made it very difficult to plan ahead and invest, placing tremendous pressure on cash flows and managing stock levels.

"There are a lot of small shop owners who have never experienced anything like this before."

The findings came in the same week as another survey revealed that shrinking profit margins were prompting many retailers to cut back on the number of big-name brands they stocked.

The survey by insurance comparison website simplybusiness.co.uk found that 57% of retailers were seeing margins slide as they tried to balance offering shoppers value for money with high stock prices.

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