Largest monthly price rises for goods and services since 2008

Will Green is news editor of Supply Management
5 December 2017

Growth in UK services slowed in November against a backdrop of economic uncertainty and pressure on margins from rising input costs.

The IHS Markit/CIPS UK Services Purchasing Managers’ Index dropped to 53.8 in November, down on 55.6 in October and against the neutral reading of 50.

Service sector firms commented on rising business and consumer spending but some noted that stretched budgets and Brexit-related uncertainty continued to act as a brake on growth.

Duncan Brock, director of customer relationships at CIPS, said: “Businesses could no longer fight against the tide of higher prices for food, fuel and salaries as input cost inflation remained close to its strongest for six years, and businesses passed these increases on to consumers at the fastest rate since February 2008.

“The level of new order growth lost some momentum, as inflation also ate away at household incomes for a double whammy effect on the UK population reluctant to spend.

“Purchasing managers voiced concerns that the dearth of skilled labour not only contributed to increased business costs due to demand for higher salaries, but that pressures on operating capacity intensified because recruitment had become more stilted.”

Chris Williamson, chief business economist at IHS Markit, said: “The big news is in relation to prices, with the PMI surveys pointing to the largest monthly increase in average prices charged for goods and services since August 2008; a time when oil prices soared just before the global financial crisis.

“Rising oil prices were again to blame in November, with firms also reporting the need to pass higher costs of a wide variety of other inputs on to customers as a result of the weak pound having driven up import prices. As such, the survey data suggest that inflationary pressures have yet to peak.”

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