LONDON (Reuters) – Companies in Britain’s services sector raised prices at a rapid pace in May on strong demand, preliminary results from the S&P Purchasing Managers Survey showed on Tuesday, which could reinforce the Bank of England’s concerns about the persistence of inflation.

The survey paints a mixed picture for business, with service companies reporting growth in May – albeit slowing slightly – while activity in manufacturing contracted again.

The composite PMI index, which tracks growth trends in both the secondary and tertiary sectors, came out at 53.9, compared to 54.9 in April and 54.6 expected.

Chris Williamson, chief economist at S&P Global, said the PMI was consistent with growth of 0.4% in the second quarter, after +0.1% in the January-March period.

“However, this growth spurt is causing further inflationary pressures as service providers struggle to meet demand and therefore not only offer higher salaries to attract staff, but also find themselves able to charge their services more expensive,” he said.

“The results of this survey are anything but optimistic, as they suggest the Bank of England still has some work to do to reduce elevated inflationary pressures in services,” the economist added.

(William Schomberg, Laetitia Volga, editing by Kate Entringer)

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