The United Kingdoms small manufacturing businesses risk being squeezed out of their domestic market as operational costs reach a new high, according to new research. The new figures from the latest quarterly Business Inflation Guide from More Than Business reveals that small manufacturing businesses in the UK are experiencing annual inflation of 8.3 per cent, 60 per cent higher than the rate of consumer inflation. According to the report, the inflation is being driven largely by the increased cost of raw materials which, despite stabilising over the summer, were 17.5 per cent more expensive in September 2011 than twelve months ago. The increased price of gas and electricity (up by 11.8 per cent and 7.1 per cent over the past twelve months) is adding further fuel to the fire of high inflation. The report says that rising cost of operations, coupled with decreased demand in European and British markets, is likely to have fed into the sharper than expected drop in manufacturing output (down 0.7 per cent since September) reported by the UK Office of National Statistics. It adds,"As low demand makes it difficult to pass rising costs on to customers, small manufacturers are at risk of being priced out of their domestic market."Its not just manufacturing businesses that are feeling the squeeze. Annual inflation across all small businesses has reached a record high of 6.9 per cent, which is the highest level of cost inflation for small firms since the inflation guide was first calculated in 2005." Click here to read full news..