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The growth in India's dominant services continued to grow in May, expanding at the fastest pace in 11 years in May on strong demand and new orders, but inflationary pressures touched new highs, according to a private survey.
The S&P Global India Services Purchasing Managers' Index rose to 58.9 in May from 57.9 in April, its highest since April 2011.
The 50-mark separates growth from contraction. The May expansion was the longest streak of growth since 12 months of growth between June 2018 and May 2019.
The survey also noted that inflation expectations continued to restrict business confidence, with optimism remaining subdued by historical standards.
Despite remaining optimistic, service providers remained concerned that inflationary pressures would dampen the economic recovery, the survey said.
The survey results also highlighted continuing subdued global demand for Indian services, with new business from abroad having now declined in each month since the onset of COVID-19 in March 2020.
Data released earlier this week showed India's economy expanding 4.1% year-on-year in January-March quarter, but a spike in retail inflation due to energy and commodity price rises poses a risk to its growth prospects.