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Cost Inflation Hits Record High as UK’s Services Sector Continues Recovery

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Close up of columns of British one pound coins

UK service providers recorded an improvement in business activity in June, with slightly slower recovery than the peak reached in May.

Source: Markiteconomics.

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The rapid recovery in business and consumer spending since the easing of pandemic restrictions contributed to the fastest creation of jobs within seven years.

Capacity constraints and staff shortages led to increased volumes of unfinished business. The recent increase in work backlogs is the highest since July 1996.

Imbalanced supply and demand also led to record levels of input cost and prices-driven inflation in June.The seasonally adjusted HIS Markit/CIPS UK Services PMI reduced to 62.4 in June, which is lower than 62.9 recorded in May.

Another huge increase in new orders helped to boost output volumes among the service sector in June and the growth rate of new business slowed down since May.

Escalation of cost inflation at service providers and manufacturing companies contributed to the steepest rise in total operating expenses across the private sector economy.

 

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