Input prices for the UK services sector rose to their highest level in three-and-a-half years during September.
The Markit/CIPS UK Services Purchasing Managers’ Index showed growth slowed in September but the weak pound exerted upward pressure on input prices, which hit a high not seen since February 2013.
David Noble, group CEO, CIPS, said: “Firms raised their prices in response, to counteract increased costs for fuel, food and elevated wage bills and as the weaker pound had an effect.”
The index slowed to 52.6 in September, down on 52.9 in August and against the neutral reading of 50, which signifies neither growth nor contraction.
Survey data showed a strengthening trend in new business, which rose at the fastest pace since February, as firms reported new opportunities and customer inquiries.
Sentiment was the strongest in three months but still weak in the context of historic data as companies reported ongoing uncertainty over the implications of Brexit.
Noble said: “Though business optimism improved further from July’s seven-and-a-half-year low, and was the strongest for three months, disquiet around Brexit still remained. The sector concentrated on stabilising rather than forging ahead with confidence, as optimism stayed below the long-term average.”
Chris Williamson, chief business economist at IHS Markit, said: “The solid PMI readings for September will cast doubt on the need for any further stimulus from the Bank of England in coming months.
“It’s clear, however, that the pace of expansion has cooled since the first half of the year, reflecting widespread concern about the potential future impact of Brexit. As such, the economy remains vulnerable to further setbacks and the need for policy action later in the year cannot be ruled out.”