According to the tracker, the rate of input cost inflation during September was the second highest in its history, as energy prices spiked and demand for labour intensified.
The food and drink manufacturing industry was among the many UK sectors that reported the sharpest month-on-month increases in prices, alongside transport operators and manufacturers of chemicals, industrial goods and metals and mining.
Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said: “As the UK economy continues to inch towards its pre-pandemic peak, logistical challenges, higher energy prices and uncertainty relating to the path of the virus as we head into winter are key risks.
“Policymakers will need to tread carefully in order to safeguard the recovery, with important fiscal and monetary policy decisions due in the coming weeks and months.”
The Tracker also found that the output of automotive (44.5) manufacturers and metals and mining (49.2) and household goods (46.6) producers contracted sharply during September due to materials and staff shortages. As a result, services businesses outperformed manufacturers by the greatest extent since January.
Tourism and recreation (62.2) – which included pubs, hotels, restaurants, leisure facilities and travel agents – was the fastest growing UK sector monitored by the Tracker for the first time since January 2012.
Lolay added: “While the number of sectors in growth mode increased last month, we are now firmly in an economic phase of recovery where big leaps in activity won’t happen every month.
COVID rule relaxation
“Tourism and recreation outpaced other sectors in September because it continues to benefit from relaxations in COVID-19 restrictions and resurgent consumer demand.”
Lloyds Bank managing director for corporate and industrial coverage warned that dramatic developments in the energy market will present further challenges for manufacturers, who will bear the brunt of these supply chain pressures.
“Most firms need to factor the likelihood of continued price pressure into their plans for months to come,” she added.
Meanwhile, Government plans to allow 800 foreign abattoir workers into the UK on temporary visas will address immediate issues, but larger labour issues still need to addressed, warned members of the industry.