Fuel shortages ease in London and south-east, as oil prices hit their highest level in eight years – Business Live | Business
UK businesses have raised prices at the fastest pace on record last month, as the energy crisis and staff shortages hit the economy and pushed inflation up.
Severe supply constraints created escalating inflationary pressures last month, with companies in the service sector reporting the smallest increase in new orders since March (after the winter lockdown).
Rapid increases in fuel, energy and personnel costs were passed on to customers in September, with ‘bill price inflation’ accelerating sharply to its highest level since data began in July 1996.
It is according to the last IHS Markit / CIPS UK Services PMI, a closely watched survey that tracks the economy.
Firms in the service sector “widely noted” that supply problems, rising transportation costs and rising wages all contributed to inflationary pressures, as customer demand recovered.
This may show that companies are increasing wages to attract and retain staff. It also suggests that soaring gas prices, persistent delivery delays and transportation problems due to a shortage of heavy truck drivers are driving up costs.
Many service companies attributed the drop in new orders to staff shortages, supply issues and the end of the stamp duty holiday (which had boosted the housing market).
Some companies, especially in the hospitality industry, have reported declining business caused by supply chain disruptions and staff shortages.
The PMI survey also found that employment growth has slowed, due to the lack of candidates to fill vacancies and the continued high number of staff departures.
Worryingly, some companies have also reported that they made redundancies at the end of the leave program last week.
Tim moore, economic director of IHS Markit, argues that companies pass their rising costs on to consumers:
“The supply chain crisis severely hampered the recovery of the UK service sector in September. Respondents to the survey widely noted that shortages of personnel, raw materials and transportation had resulted in lost business opportunities. As a result, new orders grew at the slowest pace since the end of the winter lockdown, as backlogs piled up as service providers struggled to find candidates to fill vacancies.
Another spike in operating expenses was reported in September, although this data does not yet fully reflect the inflationary impact of the UK fuel crisis and soaring energy prices at the end of the month. Higher wages were also a major reason for the increased cost burden in September.
Strict constraints on business capacity and widespread uncertainty in the supply chain have made service providers more willing to pass higher costs on to customers. The latest increase in average prices charged by UK service companies was the fastest in more than 25 years of data collection, with many companies reporting more frequent price revisions due to rising costs by suppliers.