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UK economy sees strong growth despite inflation

Along with economic rebound in the month, the pressure of inflation was also intensified…reports Asian Lite News.

Britain’s economy has seen further strong growth in June despite rising inflation as Covid-19 lockdown restrictions continued to be eased, a joint survey showed on Wednesday.

The flash composite output index across the country registered at 61.7 in June, down slightly from May’s record reading of 62.9, but still pointing to one of the strongest monthly improvements in business activity across the private sector since 1998, said the survey compiled by IHS Markit, a London-based global information provider, and the Chartered Institute of Procurement & Supply (CIPS), a Britain-based global procurement and supply organisation.

“Businesses are reporting an ongoing surge in demand in June as the economy reopens, led by the hospitality sector, meaning the second quarter looks to have seen economic growth rebound very sharply from the first quarter’s decline,” said Chris Williamson, chief business economist at IHS Markit.

Figures revealed that marked increases in output were seen across both the manufacturing and service sectors, with the two’s flash purchasing managers’ index (PMI) hitting 64.2 and 61.7 respectively, signalling robust expansions in activities.

Along with economic rebound in the month, the pressure of inflation was also intensified.

The rate of input cost inflation accelerated for the fifth month running and was the joint-fastest on record, equal with that seen in June 2008, data showed. In addition, the rate of output price inflation hit a fresh record high for the second month running.

“Record cost inflation last seen in 2008 filtered through to increasing output costs as manufacturers were unable to absorb these rapid rises any longer,” said Duncan Brock, group director at the CIPS.

“In service businesses, consumers were hit with considerably higher prices for food and hospitality, increasing the threat of soaring inflation in the UK economy this summer,” Brock added.

Looking ahead, companies remained confident that output will rise over the next 12 months as the recovery from the COVID-19 pandemic continues, said the report, adding that optimism was signalled at manufacturers and service providers alike.

British Prime Minister Boris Johnson has announced a four-week delay to the final step of England’s roadmap out of Covid-19 restrictions until July 19, amid a surge in cases of the Delta variant.

Experts have warned that coronavirus may continue to evolve for years to come, and eventually it is likely current vaccines will fail to protect against transmission, infection, or even against disease caused by newer variants, Xinhua reported.

To bring life back to normal, countries such as Britain, China, Russia, the United States as well as the European Union have been racing against time to roll out coronavirus vaccines.

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