LONDON (Reuters – Euro zone economic momentum lost more momentum as the dominant service industry of the bloc suffered from lower demand due to tighter controls on the Omicron coronavirus variant. A survey revealed.

To stop more dangerous variants spreading, some governments within the currency union encourage citizens to remain at home. However, steep price increases, due in part to supply issues, keep demand under control.

IHS Markit’s last Composite Purchasing Managers’ Index was 52.3, down from 53.3 December. It is considered an indicator of economic health.

Chris Williamson of IHS Markit, chief business economist said that “the euro zone’s economy has slowened further in January” after witnessing growth decline in the fourth quarter 2021.

The slowdown in virus fighting measures has been increased to the maximum since last May within the euro area, due to Omicron’s surge of COVID-19-related cases.

These measures had a special impact on the service industry, and its PMI decreased to 51.1 months from December’s 53.1.

Nearly all of the demand for growth was halted and the index of services new businesses fell to 51.3 (from 52.5) in April. It is now at its lowest point since April. The 50-mark that distinguishes between growth and contraction is also not far away.

In recent months, prices have risen sharply for consumers. January was no different. Due to rising input costs, companies passed some of the burden onto customers. The composite output price index rose from 60.6 to 61.9.

Since IHS Markit started collecting data in 2002, the index has been lower only once – that was November.

Williamson stated that “inflationary pressures are continuing to rise, and soaring oil prices likely to increase upward pressures in the coming months.”

According to economists polled last month by Reuters, the Eurozone inflation will rise more quickly than expected in 2022, which could put pressure on the European Central Bank (ECB) to increase policy.

The ECB meets on Thursday and has so far resisted the calls to tighten policy. Instead, it maintained its view that prices would be lower this year.