UK service sector businesses raised prices at a record pace last month as they battled mounting cost pressure and a slump in new orders due to shortages of supply and staff, according to news reports. figures.
The closely watched IHS Markit CIPS UK Services PMI survey found new order growth weakened for the fourth month in a row, with new business growing at the slowest pace in six months.
Overall service sector output was better than expected, with the report posting a reading of 55.4 in September, up from the six-month low of 55 recorded in August.
Economists expected a reading of 54.6.
The report laid bare the pressures facing the sector, with data showing companies resorting to passing costs on to customers, with the biggest rise in service prices since records of the survey began.
Supply chain difficulties and staff shortages have also led to an increase in backlogs in the sector, with unfinished business now piling up for seven straight months – the longest since 2015.
Tim Moore, economics director at survey compiler IHS Markit, said: “The supply chain crisis significantly dampened the recovery of the UK services sector in September.
“Survey respondents widely noted that shortages of personnel, raw materials and transportation have led to lost business opportunities.
“As a result, new orders grew at the slowest rate since the end of the winter lockdown, while backlogs built up as service providers struggled to find candidates to fill vacancies.”
He added that cost pressures had increased again last month due to supply chain issues and increases in staff wages, even before the full impact of the recent fuel crisis and fare hikes. energy.
“Strict constraints on business capacity and endemic supply chain uncertainty mean that service providers have become more willing to pass on higher costs to customers,” Moore warned.
This raises the specter of further price increases for consumers in the coming months, with inflation having already jumped to a record 3.2% in August, the highest level in nearly a decade.
There are growing fears of rising prices and shortages of food and items during the all-important Christmas season.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), said: “As invoice prices have risen at their fastest pace since 1996, it appears the floodgates are open for further inflation. high is spreading through the UK economy and businesses fear the growth this month could be further eroded by higher costs and shortages as we head into the festive period.