Tips for balancing increasing salary requests and increasing inventory costs?

I think the most simple and direct solution is honesty. If the margin isn't there, explain to your employees that ask for a salary request you can't accommodate. I feel most employees would be understanding that your goal is to keep everyone employed and not lay off people or cut salaries even when margins are tight.

You may lose someone to a company that has more flexibility in regards to compensation but even if that occurs unless these are super skilled workers you will be able to readily find replacements. If these people are super skilled employees that will have a major impact on your business if they leave then it's your obligation to compensate them properly.

Contrary to the unemployment rates and pool of applicants that exist, when it comes to highly skilled professionals they are in short demand because they are all employed. The cost to a company losing a key skilled employee can be astronomical. If you're faced with that prospect I feel you really need to start considering financing debt, or cutting other costs to make the money available even if that requires layoffs, hour reductions, or pay reductions for seperate nonskilled employees. It might be harsh to say, nevertheless nonskilled employees are interchangeable.