According to the Office for National Statistics (ONS), the UK economy showed growth of 0.1% in the first quarter of 2023, the same as the previous quarter and in line with market expectations. Services, production and construction increased by 0.1%, 0.1% and 0.7% respectively. The first quarter GDP level was 0.5% lower than the pre-pandemic level. The UK economy is not growing as quickly as other major economies like Italy (0.5%) or the United States (1.1%).
Today the ONS released UK inflation data. The annual CPI was 8.7% in April 2023, down from 10.1% in March but above market forecasts of 8.2%. On the other hand, core CPI rose to 6.8% in April 2023, from 6.2% the prior month. Prices of food and non-alcoholic beverages remained high, while prices of housing and utilities dropped significantly.
The cost-of-living crisis is still affecting many UK households. Inflation remains persistent and well above the Bank of England’s 2% target. The Monetary Policy Committee (MPC) raised interest rates for the twelfth consecutive time, bringing the Bank Rate to 4.50% in May 2023. The focus will be on the Bank of England’s next monetary policy meeting, where another rate hike is expected.