U.K. Services Prices Jump at Record Pace on Supply-Chain Woes By Bloomberg
(Bloomberg) — 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.
According to IHS Markit, the U.K. has been plagued by rising energy costs and staff shortages in transport, agriculture, and meat processing, and these have forced many firms to shift their high-cost labor to customers.
This resulted is the largest price increase since 1996, when the survey was started. 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. The Bank of England’s policy makers could see this as a sign of trouble. They already anticipate inflation reaching more than 4% before the year ends and will tighten their policies if prices rise.
”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.
Since the winter lockdown, new orders increased at the slowest rate in years. 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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