A new survey has revealed that three-quarters of Irish firms have seen their costs rise in the past three months.
However, only one-third of businesses have laid off workers in the same period, according to the IIB Bank/Institute of Chartered Accountants in Ireland Business Sentiment Survey.
The survey was carried out last month and was based on more than 400 responses.
IIB economist Austin Hughes said: "Rising costs remain a key concern for Irish business. Three out of four firms reported their costs increased in the past three months and a similar number expect further increases in the coming
quarter.
"The main effect is a sharp squeeze on margins as only one in 20 companies expect to raise their selling prices sufficiently to largely offset higher costs."
Mr Hughes said that most firms in the survey expected the Irish economic downturn to continue for some time.
More than half see the downswing lasting one to two years with a further 24 per cent expecting a longer slide.
PA