Britain’s economy grew by less than expected in July, with a fall in power production possibly reflecting the sharp climb in energy tariffs as well as a heat-wave that hit the country with record temperatures, official data showed on Monday.
A Reuters poll of economists had pointed to month-on-month growth of 0.4 per cent in July.
“Anecdotal evidence suggests that there may be some signs of changes in consumer behaviour and lower demand in response to increased prices,” the Office for National Statistics (ONS) said regarding a fall in power generation.
That announcement has reduced the risk of a severe hit to the economy, albeit at a cost of £100 billion (RM522.5 billion) or more to the already stretched public finances.
Last month, the Bank of England forecast that Britain would slip into a recession at the end of 2022 and not come out of it until early 2024, due in large part to the hit to living standards from the energy price surge.
The BoE is expected to raise interest rates again on Sept. 22 as it seeks to combat an inflation rate above 10 per cent.
The heat-wave in July might also have been a factor behind the fall in power demand although there were signs that it boosted ice cream manufacturers and visits to amusement parks and golf clubs, the ONS said.
Services output grew by a monthly 0.4 per cent in July but industrial production was down 0.3 per cent and construction dropped by 0.8 per cent, in part reflecting lost working hours because of the hot weather as well as the jump in prices for materials, part of the broader inflation surge.
Gross domestic production fell by 0.6 per cent in June, which included two days of public bank holidays to celebrate the late Queen Elizabeth’s 70 years on the British throne.
But an ONS spokesperson said the impact of the holidays was not a big factor in July.
Separate trade figures also showed the impact of soaring prices with the value of imports of fuel hitting an all-time high of £11 billion in July and representing a record 21 per cent of all goods imports. — REUTERS
