Retailers are warned to keep an eye on cash flow in the months ahead as the cost of running a small shop is set to rise in 2010, with experts predicting that c-stores with a heavy dependence on heating, chilling and lighting will face soaring expenditure.

The latest Business Inflation Guide from insurance company More Than Business showed that the cost of running a shop rose by 0.5% in the third quarter of 2009 compared with the previous quarter and warned that commodity price rises would push costs higher.

Fuel prices jumped by 3.42%, raw materials rose by 1.57% and labour costs increased by 0.22%. However, overall costs were 1.7% lower compared with the year before due to deflation during the past 12 months.

More Than Business head of insurance Mike Bowman advised retailers to budget for the increased costs. "The predicted sharp rise in commodity prices is likely to raise the cost of running a small shop," he said. "As a result, it's important that small shop owners manage cash flow carefully as suppliers begin to push prices up again as markets revive. Small shop owners with a heavy dependence on heating, lighting and fuel are expected to experience the sharpest rises."

Professor of Enterprise at Warwick Business School Stephen Roper, who compiled the Business Inflation Guide, expects the increases to continue until April. "We expect small business costs to rise sharply at least until Easter, when we predict prices will reach the same level as they were before the recession," said Roper.

"While costs are on the up, the disappearance of deflation means markets are strengthening and consumer spending is growing. This suggests we are now beyond the crisis, but small shop owners must keep an eye on cash flow."

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