Companies are raising prices at some of the fastest rates on record, and the services sector is shrinking quicker than at any time since October 2001 – just two of the findings of the latest PMI survey and a couple of very good reasons to believe that the UK, like the US, is slipping into recession.

Most interestingly, the Chartered Institute of Purchasing and Supply(CIPS)/Markit survey suggests that input prices are soaring at breakneck speed – with June’s reading of 71.7 up markedly on the 67.7 figure recorded in May.

In response companies are aggressively raising their prices – leaving the prices charged index standing at 56.0 in June, up from 55.8 in May. But already the third highest reading in the survey’s 12 year history looks set to go up, rather than down, as economic conditions worsen.

These findings are likely to place already over-stretched procurement organisations in an even more awkward position in the second half of the year, as companies look to remain competitive by keeping costs down - despite almost unprecedented external price pressures.

Activity in the service sector offers little respite, with the survey showing activity falling faster than even the most downbeat of analysts had expected. Activity hit a low of 47.1 in June, down from 49.8 in May, and with the magic 50 figure (which provides the cut-off point between expansion and contraction) looking ever further away it’s little wonder that the ‘r’ word is starting to cast an increasingly long shadow across the City of London and beyond.

"The services report confirms the broad-based deterioration in UK economic activity, with the composite PMI heading towards unprecedented (for the UK PMI surveys) recession territory," said Paul Smith, senior economist at Markit Economics.

"The issues facing the service sector are rooted in the dual shocks of both the financial crisis and -- of rapidly increasing concern to service providers -- surging global oil prices."

With neither showing any sign of letting-up it appears that things could get worse (perhaps a lot worse) before they get better.