UK Service Sector Costs Rise as Fuel and Labor Cost Higher

Warnings that Britain is heading for a sharp increase in inflation have intensified after a key business survey showed companies in the services sector are grappling with their biggest rise in costs for almost six years.

The report into the UK economy’s biggest sector, which spans banks to hotels and hairdressers, showed firms suffered their first slowdown for four months in January. This suggests the economy lost momentum at the start of 2017.

Companies reported higher fuel and labour costs and said they had to pay more for imports because of the pound’s sharp fall since the referendum. There were also further signs that companies were passing on some of that cost burden to customers in higher prices. That will add to concerns that rising inflation is eroding household budgets and will hit consumer spending, a key driver of the UK economy.

Living costs have started to rise at a faster pace in recent months on the back of rising energy prices and the pound’s weakness. Inflation hit its highest level for more than two years in December at 1.6%, and some forecasters see it going above 3% this year.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza