European firms hike prices at fastest pace on record

Businesses in Europe are hiking prices at the fastest pace on record in response to swelling costs triggered by Russia’s invasion of Ukraine and China lockdowns, revealed a closely watched survey released today.

The fresh figures underscore the severity of inflationary pressures that are spreading through the world’s top economies.

Data published on Tuesday by S&P Global revealed British factories are also raising prices at a record pace in response to thinner margins.

Global trade flows have been disrupted by Moscow sending troops into Ukraine and Beijing plunging ports into lockdown to cope with an uptick in Covid-19 cases, leading to European firms’ costs jumping at the second fastest pace on record.

Expectations of the European Central Bank lifting interest rates out of negative territory have strengthened this year due to inflation on the Continent reaching 7.5 per cent, the highest level since the euro was created in 1999.

Despite the record price rises, demand is holding up well, with the eurozone composite purchasing managers’ index, also produced by S&P Global, climbing to 55.8 last month, the highest level since last September.

A reading above 50 indicates most firms reported activity expanding.

A relaxation of virus curbs in Europe has boosted demand for services.