Rising Prices Threaten Profits

Rising prices for materials and services are squeezing business profits.

The Kiplinger Forecast (subscription required) predicts businesses of all sizes to be hit with higher prices for energy, steel and other metals, and trucking costs.

U.S. small businesses can also expect health insurance premiums to increase by about 15%, which is actually less than last year’s hikes of 20%.

The recent price rises in steel and building materials in the United States are something we have noted before here and here. But the problem is worldwide.

Take for instance, India. India has become a bit of a whipping boy in the U.S. over the past six months due to fears of offshore outsourcing. Yet, in the matter of rising prices, India is in much the same boat as the U.S., feeling a similar severe pinch with high steel and cement costs.

Similar stories are repeated around the globe. Brunei. Uganda. Canada. Thailand, Malaysia and South Korea.

What will all these rising prices mean? Lower profits for businesses, since they won’t be able to pass along price increases to customers until 2005. And rising inflation at the producer level.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.