According to a survey, British business activity unexpectedly slowed this month to an 11-month low, but cost pressures remained high, putting the Bank of England on track to raise interest rates next week. In January, the IHS Markit/CIPS Composite Purchasing Managers Index (PMI) fell from 53.6 to 53.4.

Consumer-facing companies were hit again by the Omicron variant of coronavirus, and manufacturers said orders climbed at the slowest rate in a year, however business and financial services companies grew at a faster rate.

"Business confidence in the outlook improved as well, resulting in continued solid employment growth," said Chris Williamson, IHS Markit's chief business economist.

But gauges of costs paid and prices charged by services firms, watched closely by the BoE, rose in January, after easing back in December from recent all-time highs.

UK manufacturing companies ramp up production in March | Financial Times

"With inflationary pressures remaining near-record highs, the Bank of England is likely to raise interest rates again at its next meeting," Williamson said.

Consumer price inflation in the UK hit a nearly 30-year high of 5.4% in the year to December, and many economists believe it will rise even higher than the BoE's most recent projection of a peak of roughly 6% in April.

The services PMI fell to 53.3 in January from 53.6 in December, its lowest level since February since last year. 

While the manufacturing PMI fell to 56.9 in January from 57.9 in December, the drop reflected the way the survey measures supply chain delays, which eased further last month. Unlike the considerably larger services sector, manufacturing price pressures eased in January.