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The prices paid by customers in the U.K. services sector rose at the fastest pace on record last month as the nation’s supply-chain crisis accelerated inflationary pressures in the economy.
With energy prices spiraling and a shortage of staff in haulage, agriculture and meat processing causing significant disruption, U.K. firms have been forced to pass the rapid rises in costs to consumers, according to a survey by IHS Markit.
That resulted in the fastest increase in prices charged since the survey began in 1996. Worse may be to come, with the figures not fully reflecting the full impact of the U.K.’s fuel crisis at the end of September.
Markit’s report is the latest to highlight how supply-chain issues are increasingly filtering through to consumers, exacerbating a looming cost of living crisis this winter. It could also be a warning sign for Bank of England policy makers, who already expect inflation to reach more than 4% by the end of this year, and are poised to tighten policy should price rises become entrenched.
”Tight constraints on business capacity and rampant supply chain uncertainty meant that service providers have become more willing to pass on higher costs to customers,” said Tim Moore, economics director at IHS Markit. Many businesses are “reporting more frequent reviews of pricing due to escalating cost increases by suppliers,” he said
The supply constraints also pulled down the pace of growth within the U.K.’s dominant services sector, with Markit saying supply-chain shortages were increasingly leading to lost business opportunities. New orders rose at the slowest pace since the winter lockdown.
The firm’s index of growth in the industry stood at 55.4 last month, slightly above an earlier estimate but well below the recent peak of 62.9 seen in May.
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