Bars, restaurants and hotels are noting a slowdown in activity. | Majorca Daily Bulletin reporter

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After a thumping start to the season in May, the Spanish Hotel Confederation has reported that bookings from the main source markets such as the UK and Germany have started to slow over recent weeks and they are blaming inflation. Many of the leading hotel chains have launched special high season offers in order to try and maintain the early momentum in the market.

But apart from inflation, would-be holidaymakers who have yet to book will be looking at all of the travel chaos caused by the strikes and lack of staff across Europe and perhaps be thinking twice. The outlook is not encouraging.

Activity in Spain's services sector slowed again in June as soaring inflation continued to impact businesses, which in turn fuelled pessimism, a survey showed today.

S&P Global's Purchasing Managers' Index (PMI) of services companies, which account for around half Spain's economic output, fell to 54.0 last month from 56.5 in May.

That was still well above the 50 mark that indicates growth, although June's reading was the lowest since March.

Respondents to the survey said more hiring and higher personnel costs had added to dearer energy, fuel and supplier goods in general.

"With elevated price pressures likely to persist in the near-term at least, demand - and with that activity growth - is set to be adversely impacted in the months ahead," S&P Global Economics Director Paul Smith said in a report.

"This showed up in confidence data, which showed the lowest degree of optimism recorded by the survey since late 2020."

Spain's 12-month inflation surpassed 10% in the period through June for the first time in 37 years, official data showed last week.

A sister PMI survey on Friday showed activity growth in the manufacturing sector also slowed down last month adding to concern of a risk of stagflation.