The recent inflation reduction needs to be reflected in business costs, particularly those influenced by the State, according to the Irish Small & Medium Enterprises Association (ISME).
The Central Statistics Office today announced that inflation had dropped from -1.7% to -2.6% in February.
ISME claims however that that cost increases are continuing to hurt SME businesses and immediate action is required to rescue lost competitiveness.
"From an SME perspective, we have yet to witness any benefit from the reduction in inflation due to the high level of business costs," said ISME's head of research, Jim Curran.
"This is completely unacceptable as many of the costs militating against business are state-controlled, including local charges and energy. If anything, the Minister scored an ‘own goal’ in the recent Budget, exacerbating the problem, with ludicrous increases in diesel and the insurance levy.
“There needs to be recognition by Government that cost competitiveness is crucial to the future of business and the future of the economy. With negative inflation predicted to continue for the foreseeable future, we now have an opportunity to address our cost base, ensuring a more competitive economy when the world economies pick up.
"This will have to include reductions in wages, local charges, energy and the cost of the public sector.
“The overall costs of doing business needs to be reduced, reflecting the new reality. It is therefore imperative that Government plays a positive role, leading from the front in addressing the significant cost impediments imposed by Government on business, something they failed to do in the recent Budget."