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Businesses Face "Subdued" Cost Increases

News Release. For immediate release.

The Main Report Says Businesses Face "Subdued" Cost Increases

While we live in a low inflation world, many costs for business are still on the up, as this year's release of The Main Report Business Alert's Business Costs 2013 report shows. (report attached)

The annual publication looks at what businesses should expect as far as costs go for the coming year.

The Report says this year businesses can expect increases in costs in 9 out of the 23 categories the report looks at. Costs in 11 categories will remain roughly the same, while a mere 3 will be heading down.

Research analyst for The Main Report Group, Tony Doe, who compiles the report, says "at least this year many of the costs faced by businesses look like staying at around the same levels as they were last year."

"But the usual culprits are helping to drive costs higher - electricity, postage, insurance, shipping local body rates and wages. The cost increases may be more subdued, but they will still impact on business planning and prices."

Some highlights:

• Wages: 2012 saw unemployment stay stubbornly high, with wages subdued as a result. Unemployment is likely to stay around the 6%+ level all this year. Skill shortages will emerge in certain areas, particularly IT, Engineering and construction. Public sector wages will continue to underperform. Expect private sector pay to stay well above the state sector, as Govt austerity continues.

• Shipping: The international shipping lines are calling the shots and costs have increased significantly over 2012, while services were cut. Expect more cost increases and reductions in services this year.

• Electricity: Keep your eyes out for a good deal, and be prepared to negotiate if you are a bulk user, or shift supplier if you don't have high usage muscle. But electricity prices will rise as generators take stock of lower demand and recovering their investment in more secure generation and infrastructure.



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