UK Services Firms Face Rising Costs Amid Middle East Conflict Fuel Surge

British services firms faced rising costs in September, driven by higher fuel prices due to the ongoing Middle East conflict. The S&P Global Purchasing Managers’ Index (PMI) for the services sector fell slightly to 52.1, down from 52.5 in August, marking the joint-weakest growth since June. According to Tim Moore, economics director at S&P Global Market Intelligence, the surge in fuel prices led to the sharpest increase in prices charged by service sector companies since May, reversing the slowdown observed earlier in the year.

The survey revealed that input cost inflation for British services companies reached its highest level since June, fueled by rising wages and fuel expenses. Over a third of firms reported an increase in their average cost burdens, while a measure of prices charged by companies hit its highest point since May. This trend has raised concerns at the Bank of England about a potential resurgence in inflation.

Employment in the sector continued to decline for the 24th consecutive month, the longest period of decline since records began in 1997. Business sentiment for the year ahead also dipped from August’s seven-month high, attributed to weak demand and persistent cost pressures. The composite PMI, which includes the manufacturing industry, eased to 52.0 from 52.5, the lowest since June but still indicating growth above the 50.0 level.