Yahoo Finance UK services firms hike prices at record pace
UK businesses raised prices at the fastest pace on record to cope with a cost storm with as many as four in 10 service companies saying they put prices up in March.
The latest survey of UK purchasing managers found that “an unprecedented 40%” of firms raised their average prices charged in March, while only 3% cut them.
That shows the fastest rate of price inflation since the PMI survey began in July 1996.
Firms also reported severe cost pressures, due to rising raw material costs, energy bills, and wages. Around 65% of the survey panel reported a rise in their operating expenses in March, while less than 1% noted a decline.
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Last month the Bank of England warned that growth looks set to slow amid a global surge in inflation pressures, fuelled by turmoil in commodity markets following Russia’s invasion of Ukraine.
The S&P Global/CIPS UK Services PMI rose to 62.6 in March from 60.5 in February, an upward revision from a preliminary flash reading of 61. A reading above 50 indicates a majority of firms reported growth.
The removal of pandemic restrictions and the return of workers hunting for lunch spots as employees moved back to the workplace led to a sharp increase in demand.
“The near-term growth outlook weakened in March, with optimism dropping to its lowest since October 2020 as the war in Ukraine and global inflation concerns took a considerable toll on business sentiment,” said Tim Moore, economics director at S&P Global.
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The services survey’s gauge of business expectations fell to its lowest level since October 2020 and there were some signs that the inflation picture could still worsen.
“Many survey respondents commented that the full extent of the recent spike in their operating costs had yet to be passed on to customers,” Moore warned.
