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The cost of doing business is on the rise for manufacturers who are suffering from rising fuel prices, higher raw material costs and the increased price in energy, the Confederation of British Industry (CBI) claims.

John Cridland, the deputy director-general of the CBI, told BBC Radio 5 Live's Wake Up to Money programme that the manufacturing industry had originally been coping well with the crunch but now increased costs were 'really beginning to bite'.

He says that having to pass on rising costs from 'business to business' was 'disappointing' for the manufacturing industry: 'The service sector may have been hit by the credit crunch but actually our exporters have been keeping selling.

'So that fact that they've got to pass on price increases is a bit of a double-whammy,' he adds.

A CBI survey of 419 firms found that 51 per cent of them had seen a rise in their average unit costs in the three months to April, whereas only seven per cent said their costs had decreased.