Small businesses should ensure they constantly review their suppliers and negotiate on prices and payment terms to get to grips with spiralling inflation.

That's the message from More Th>n Business, which carried out a survey in conjunction with Warwick Business School that puts inflation in the small business sector at 9.9%.

The Business Inflation Guide revealed small firms faced cost increases of 3.4% in the second quarter of 2008 alone, with rising fuel, energy, raw material and labour costs all contributing to a rate of inflation that is well above official statistics.

"We suspected that UK small businesses were under great cost pressures but we could find no data to confirm this. So we set out to create the first purpose built measure of small business inflation. The results surprised even us," said Mike Bowman, head of More Th>n Business.

"These businesses are the unsung heroes of the British economy, representing over 1.6m businesses in the UK.

"Now that we have a true picture of rising costs for small businesses, people will be asking the government what realistic measures can be taken to support them, particularly in the current economic climate."

The manufacturing sector was particularly badly hit, with inflation in the second quarter standing at 4.2% and an annual rate of 11.9% in the year to June 2008.

It also highlighted regional differences, with Scottish companies only facing an annual increase of 8.5% compared to a rise of 11% in Northern regions.

"When costs are rising small businesses really should leave no stone unturned in the search for savings," added Bowman.

"The top priority, if they haven't already done so, should be to review all suppliers and negotiate on prices and payment terms, particularly with regard to energy suppliers and other important cost items. Seeking more efficient ways to use energy in the future should also be a priority."