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 India's service sector growth weakened to a three-month low but remained resilient in June amid strong demand, according to a private business survey on Wednesday, despite prices rising at their quickest pace in nearly six years.

Sustained growth in the sector, which accounts for around 60% of overall output, indicates Asia's third-largest economy will continue to outpace many of its major peers over the coming quarters.

The S&P Global India services Purchasing Managers' Index (PMI) fell to 58.5 last month from 61.2 in May and was lower than a Reuters poll prediction for 60.2.

But it was still firmly above the 50-mark separating growth from contraction. It has been above breakeven for nearly two years, the longest stretch since August 2011.

"Demand for Indian services continued to surge higher in June, with all four monitored sub-sectors registering quicker increases in new business inflows," noted Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

"This bullish pick-up in growth momentum supported a further sharp upturn in business activity and encouraged another uplift in employment figures, boding well to near-term growth prospects."

A new business sub-index, a proxy for overall demand, rose to 58.8 last month from 58.4 and services firms added jobs for a 13th consecutive month. Business optimism was at its highest so far this year.

However, the slowing global economy dragged export growth to a three-month low.

Meanwhile, services firms raised prices charged at their sharpest rate since July 2017 despite slowing input cost inflation.

"Service providers experienced a retreat in cost pressures, although business expenses rose again amid higher food and wage costs ... Combined with manufacturing, output prices across the private sector increased at the sharpest pace in over a decade," added De Lima.

Although India's overall inflation cooled to a more than two-year low in May, the outlook is uncertain amid recent price rises in some food items and an uncertain monsoon, likely compelling the Reserve Bank of India to keep its interest rates unchanged for the rest of this year.

India has raised rates by 250 basis points (bps) since May 2022 to tame inflationary pressures, but surprised analysts in April by keeping them unchanged.

Slower growth in both services and manufacturing activities pushed the composite PMI down to 59.4 last month from 61.6 in May.