The Irish Small & Medium Enterprises Association has expressed concern at the sharp rise in inflation in December, up to 1.3% from 0.6% in the previous month.
ISME fears that the general trend in price increases will further undermine cost competitiveness, restricting the ability of smaller companies to trade.
The association warned that unless the cost of key business inputs, including, local charges, energy, transport, wages and waste costs are urgently tackled, "more companies would close and further jobs would be lost".
ISME Chief Executive Mark Fielding said: "With inflation taking a substantial hike in the last month, mainly due to increases in transport costs, the fear is that the costs of doing business will continue to increase, threatening business and trade.
"The business sector is already being faced with exorbitant state influenced costs, which continue to strangle smaller companies, any further increases will be catastrophic.
"With the exception of the decision to reduce the minimum wage, little or no effort has been made to address cost competitiveness, which makes a nonsense of the so called business focused recovery policy announced in the Government’s National Recovery Programme.
"The recent increases in fuel costs, with the promise of more to come in the form of Carbon taxes, makes a mockery of this Administration’s commitment to restoring costs competitiveness.
"The facts remain that the Government has done little to alleviate the high cost environment for business and are missing an opportunity to regain lost competitiveness.”