3 Sep 2025 (Punjab Khabarnama Bureau): India’s services sector posted an impressive expansion in August, with the HSBC India Services PMI soaring to 62.9—its highest level in 15 years—driven by surging demand both at home and abroad. However, the growth came at a price: inflation pressures intensified significantly across input costs and output prices.
Exponential Growth Fueled by Demand Surge
The PMI, compiled by S&P Global, jumped from 60.5 in July to 62.9 in August, indicating a robust uptick in activity. The surge was powered by a sharp rise in new orders—propelled by both domestic consumption and the strongest export demand seen in over a year and a half.
Inflationary Pressures Intensify
As services firms responded to strong demand, they passed on higher costs to customers. Output price inflation climbed to its most elevated level since July 2012, while input cost inflation rose at its fastest pace in nine months, signaling mounting cost pressures that could spill over into broader inflation.
Demand and Outlook Stay Positive
Business confidence rose to a three-month high, with firms optimistic about upcoming advertising spends and overall demand. Despite the upbeat sentiment, employment growth remained modest—suggesting that firms are still ramping up cautiously amid rising costs.
Composite Economic Momentum
The Composite PMI, which combines both services and manufacturing performance, climbed to a robust 17-year high of 63.2 in August—rising from 61.1 in July—showing broad-based economic strength propelling India’s post-pandemic recovery.
Economic Implications and Outlook
While the services sector demonstrates resilient growth, rising inflation is a concern. With overall inflation at a low of 1.55% in July, the latest data could mark the turning point toward an inflation rebound. Economists suggest monetary authorities may tread cautiously before contemplating rate cuts.
Summary
India’s services PMI hit a 15-year high of 62.9 in August on robust domestic and export-led demand, but soaring input and output prices signal rising inflation risks amid strong economic momentum.