Galloping inflation weighs on households forced to cut spending
Britain’s economy contracted in the three months to June, falling 0.1% as soaring inflation dampened spending, according to data released by the Office for National Statistics on Friday.
The decline was smaller than the 0.3% contraction expected by analysts and followed a 0.8% drop in the first quarter of 2022. Monthly estimates showed that GDP fell 0.6% in June, after a 0.4% increase in May.
The latest data indicated growing weakness in consumer-facing sectors of the economy as Britons faced inflation hitting a 40-year high. Inflation reached 9.4% in July and should continue to rise until the fall.
The ONS reports a 0.2% drop in household consumption in the second quarter, offset by a positive contribution from net trade.
The Bank of England warned last week that it expects Britain’s economy to enter its longest recession later this year since the 2008 global financial crisis. 13% in October.
READ MORE: UK faces biggest fall in real wages in a century – report
“The UK economy is approaching recession and the worst is yet to come,” Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, told Reuters.
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