Services PMI points to less pass through from NLW increase to inflation

Some interesting commentary on the NLW and its impact on costs / prices in the press release. The early indications on this seem to be not as concerning to the MPC as could have been feared, as it looks as though the passthrough from higher wages hasn't had a huge impact:

• "Higher wages, partly driven by a considerable rise in the National Living Wage in April, resulted in the sharpest overall increase in input costs since August 2023. In contrast, pricescharged by service sector firms rose at the slowest pace for three years."
• "Around 39% of the survey panel reported an increase in their average cost burdens in April, while only 1% registered a decline. The resulting seasonally adjusted index signalled that cost inflation accelerated since March to its steepest for eight months."
• "Efforts to pass on higher business expenses to clients resulted in another robust rise in average prices charged by service sector companies. However, the overall rate of charge inflation eased to its lowest since April 2021. There were reports that competitive pressures had constrained pricing power and led to some promotional discounting."