UK sees GDP grow by 0.2%

Gross domestic product (GDP) expanded by a revised 0.2% in the latest quarter, reflecting the effects of squeezed household incomes, as well as labour and product shortages in some industries. Inflationary pressures reflected in domestic and international prices have fed through to nominal GDP, which increased by 1.4% in the quarter. 

Monthly GDP, meanwhile, remained flat in the three months to July 2022, with consumer confidence falling to a historic low - reflecting concerns around the economy and finances from the effects of higher inflation. As for the volume of retail sales, this continued to decline in August 2022. 

There was a further decline in real household disposable income, dropping by 1.2% in the second quarter of 2022 - a figure which has now fallen for four consecutive quarters, reflecting the effects of higher price inflation. This coincides with recent cost of living findings which show that around a quarter of respondents are now unable to save money as usual. 

Additionally, high rates of inflation have continued to erode the “forced” savings seen at higher levels than during the Covid pandemic, with the household saving ratio now being at 7.6% - although this is still higher than where it was prior to the pandemic. 

Households also increased the amount they deposited, and there were annual increases in all consumer credit - which was at its highest rate since March. 

Alongside this, Consumer price inflation remained elevated - primarily underpinned by increases in global energy and tradable goods prices over the last year. Having reached a 40-year high in July 2022, there was a slight 12-month rate fall in Consumer Prices Index inflation to 9.9% in August 2022. 

This easing reflected lower motor fuel prices - which more than offset the continued increase in food prices. There was an increase in the annual rate of core inflation in August, which is at its highest rate in more than 30 years.