The “pingdemic” and raw materials shortages have hit UK economic growth, according to a flash PMI.
Growth in the IHS Markit/CIPS Flash Composite Purchasing Managers’ Index hit a fourth-month low in July due to staff and materials shortages.
Chris Williamson, chief business economist at IHS Markit, said: "July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.
“Concerns over the Delta variant have meanwhile overshadowed the passing of ‘freedom day’, and were a key factor alongside Brexit and rising costs behind a sharp slide in business expectations for the year ahead, which slumped to the lowest since last October.”
Unilever said in its half-year results margins had fallen due to rising raw material, packaging, and distribution costs globally, and it was responding by raising prices in some markets.
Chief executive Alan Jope said palm oil prices were up 70%, soybean oil up 80%, crude oil up 60%, and ocean freight up 40-60%.
The PMI found optimism about the business outlook was the lowest for nine months.
Duncan Brock, group director at CIPS, said: "Acute material and staff shortages in certain sectors interrupted the rhythm of recovery in private sector business as signs of malaise crept in affecting output, new orders and business optimism.
“Firms’ costs rose at a rate unprecedented in over 20 years of survey history as supply shortages pushed up the price of goods, suppliers of services hiked prices and employee pay continued to rise."
Responding to the pingdemic, the government announced supermarket depot workers and key food manufacturers in England will be exempt from isolating rules because 20% of workers in food supply chains have been forced to self isolate.
Supermarkets had warned that staff shortages caused by the pingdemic would cause gaps on shelves if the government didn’t take action to maintain supplies.
Food supply chain workers contacted by the NHS Test and Trace app will be allowed to forgo isolation requirements as long as they test negative for coronavirus.
The move will apply to around 10,000 workers at 500 sites, including 170 distribution depots.
The plans will not include supermarket store workers.
ONS estimates suggest up to one in 75 people now have Covid-19, with over 800,000 people testing positive last week alone. This is up from one in 95 the previous week.
A record 618,903 people were told to self-isolate by the NHS Covid app between 8-15 July in England and Wales.
Environment secretary George Eustice told Sky News: “We've been working closely with the food industry, both the manufacturers and the retailers, over the last week or so. Monitoring the situation closely, looking at indices such as late deliveries to individual stores and absence levels.
"The industry had some concerns at the end of last week, but we've been keeping it under close review.
“We're never going to take risks with our food supply chain.”
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