Irish services growth surges to 20-year high in July- PMI

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People eat in a restaurant in Dublin as campaigners call for the retention of the 9% VAT rate for the hospitality sector ahead of Ireland's budget later this month

DUBLIN (Reuters) - Growth in activity in Ireland's service sector surged to a 20-year high in July as the country continued to ease one of Europe's strictest COVID-19 lockdowns, but the boom is fuelling cost inflation, a survey found on Thursday.

The AIB IHS Markit Purchasing Managers' Index (PMI) rose to 66.6 in July from 63.1 in June to hit its highest level since August 2000. That compares to a 2021 low of 36.2 reported in January, when the economy was placed back in lockdown after a surge in infections.

A reading above 50 indicates an overall increase in activity compared to the previous month.

Ireland further eased restrictions in July by permitting indoor dining and drinking in bars and restaurants, though only to vaccinated customers.

The July survey points to a "rapid rebound" in services activity, driven by the release of pent-up demand and greater confidence among consumers, AIB Chief Economist Oliver Mangan said.

The strongest rate of growth was seen in the transport, tourism and leisure sector.

The recovery is helping to fuel inflation, with prices charged to customers increasing at their fastest pace in nearly six years, and input price inflation hitting a 13-year high.

(Reporting by Conor Humphries; Editing by Kevin Liffey)

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