UK consumer services sector sentiment falls to lowest in over a year

LONDON, May 28 (Reuters) - Sentiment among Britain's consumer-facing ​services ⁠businesses fell to its lowest ​since February 2025 this month and a recent rebound in business services morale ​reversed ‌course, a survey from the Confederation of British Industry showed on Thursday.

"Profits ⁠are falling sharply and firms are ⁠being forced to scale back ​investment and reduce headcount," CBI economic surveys and data manager Charlotte Dendy said.

"With inflation set to rise in the coming months, ​consumer caution ‌is likely to intensify, adding further strain to an already subdued demand backdrop," she added.

Further details included:

* Consumer services firms' overall profitability fell at the fastest pace since August 2020 ​as their costs rose faster than they were able to increase ‌prices

* The optimism balance in consumer services fell to -49 in May from -45 in February, its ‌lowest since February 2025

* The optimism balance in business and professional services fell to -46 in May from -3 in February, its lowest ​since November 2025

* Firms expect to cut capital spending of all types due ‌to uncertain demand and inadequate returns, with the exception of IT investment by business and professional services firms

* The Bank of England ⁠is ⁠keeping a close eye on prices and profit ‌margins to gauge whether the surge in energy prices caused by the Iran ​war will ​trigger persistent inflation

* The survey took place ‌from April 27 to May 13 with 97 responses from consumer services firms and 195 responses from business and professional services firms. (Reporting by David Milliken Editing by William Schomberg)