A survey has shown that Britain's services sector accelerated unexpectedly in June, but inflation pressures picked up.
The CIPS/NTC activity index rose to 57.7 last month from 57.2 in May. That was the highest level since January and surprised analysts who had expected a decline.
Particularly worrying for the Bank of England will be a rise in both input and output price inflation. The input price index rose to 58.8 from 58.3, the highest since March, while the output price index rose even more strongly to 53.3 from 52.5.
Britain's central bank is concerned that strong demand and capacity constraints are continuing to exert upward pressure on prices despite four interest rate rises in under a year. Its Monetary Policy Committee is expected to raise interest rates again on Thursday to 5.75%.
The service survey's new business index rose to 59.6 last month, its highest since November, while the employment index rose to 54.5, its highest since February.
A similar survey in the euro zone also showed service sector activity accelerating in June due to booming business in France, Germany and Italy. The euro zone purchasing managers' index (PMI) for the service sector rose to 58.3 points in June from 57.3 in May.
