The monthly S&P Global Services PMI survey (December 2025) indicates intensifying price pressures, despite slower growth in economic activity. The headline Services PMI index fell to 50.5—the lowest level since July 2024—signaling a marginal contraction in the dominant sector of the UK economy (80% of GDP).

Food Inflation in the Lead:

Food price inflation reached 5.2% year-on-year (the highest since November 2023), primarily due to increased energy, transport, and wage costs. Supermarkets like Tesco and Sainsbury’s raised prices on bread (+8%), milk (+6%), and meat (+10%). PMI Director, Chris Williamson: “Firms can no longer absorb costs and are passing them entirely onto the consumer.”

Widespread Pressures:

Input Prices Index rose to 62.1 (highest since August 2022), driven by rising wages (average 4.5%), fuel (+15%), and disrupted supply chains. Services (restaurants, salons) increased prices by 3.8%. The Bank of England (BoE) warned this trend could keep interest rates at 5%.

Weak End to 2025:

New Orders PMI fell to 49.8, the worst since the 2023 recession. Q4 GDP showed zero growth. Businesses have paused hiring (Employment Index at 48.2). Cyrus Jessop from S&P: “Price pressure complicates monetary policy despite weak demand.”

Consumer Impact:

Households are grappling with headline CPI inflation of 3.4%, which has reduced purchasing power by 2.1%. Labor strikes (NHS, rail) have intensified. ONS forecasts 2026 inflation to reach 3.8% unless the BoE intervenes.