By Marcus Leach

New data released today (Wednesday) has shown that the UK's service sector expanded at its fastest rate for four months in July.

The Markit/Cips services purchasing managers' index (PMI) increased from 53.9 in June, to 55.4 in July with any figure above 50 representing growth.

Analysts had been expecting a slow down in activity, although it was not all good news. The index also revealed that the service sector cut jobs despite the increased activity.

Stiff competition meant that inflation in the cost of goods bought from service companies was at its lowest rate for 10 months.

"Yet again it's the segments most exposed to consumers' lack of disposable income that suffered most, and all businesses are being hit by inflation and rising utility bills," said David Noble, chief executive of the Chartered Institute of Purchasing & Supply.

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