UK private-sector growth slowed to a three-month low in September while price pressures intensified, according to the latest S&P Global flash purchasing managers’ survey. The data provide a fresh warning for the government ahead of next month’s Budget and complicate the Bank of England’s interest-rate outlook.

Growth loses momentum

The survey’s composite PMI fell to 51.7 in September from 52.5 in August. A reading above 50 indicates expansion, but the latest result points to only marginal growth across the private sector.

S&P Global’s estimate suggests the economy is growing at an annualised quarterly pace of roughly 0.1%, highlighting the fragile condition of UK demand. Services activity weakened to a three-month low, although manufacturing orders reached their strongest level in three years, offering a limited sign of resilience.

Inflation pressure returns

Businesses reported a renewed acceleration in input costs, with higher energy and fuel prices contributing to the increase. Prices charged by services companies rose at their fastest rate in four months.

The combination of subdued activity and stronger inflation creates a difficult policy environment. Higher costs threaten to squeeze household spending and business margins, while persistent price pressures could limit the Bank of England’s scope to reduce borrowing costs.

Budget pressure

The figures arrive as Finance Minister John Healey prepares for his first Budget in October. Weak growth, cautious hiring and elevated borrowing costs increase pressure on the government to support business confidence without adding to inflation.

Business optimism nevertheless rose to a seven-month high, suggesting that some companies expect conditions to improve. The survey also recorded stronger manufacturing demand, but the broader picture remains one of limited expansion and rising operating costs.

For the Bank of England, the data reinforce the tension between slowing economic momentum and renewed inflation risks. Financial markets have been pricing a growing possibility of an interest-rate increase in November if energy prices remain elevated.