The UK economy grew by 0.7 percent in the third quarter, in line with City analysts’ expectations, the Office for National Statistics said. The ONS also reported growth of 0.2 percent in September. Consumers and businesses kept spending despite high oil and gas prices, which the agency said played an important role in restricting growth.
Fuel prices weigh on output
The ONS said a rise in petrol, diesel and natural gas prices after the re-escalation of the Middle East conflict restricted growth. Oil rose above $100 a barrel in September and stayed there until earlier this month, before dropping in recent days. Natural gas prices were about three times their February level before the attack on Iran by the US and Israel.
Inflation has risen this year, mostly because of higher motor fuel prices. Petrol prices have been pushed above 1.70 pounds a litre, and diesel has approached 2 pounds, according to the figures cited.
Revisions and forecasts
The ONS revised August growth down from 0.1 percent to zero. Economists had expected zero growth in September, so the 0.2 percent reading came in above that forecast.
The Office for Budget Responsibility forecast in its November budget that growth would reach 1.2 percent this year. That projection already looks out of date, as growth has continued to exceed expectations.
Bank of England response
Bank of England policymakers voted last week to raise interest rates by a quarter point to 4 percent, aiming to cool inflationary pressures. Growth has run ahead of forecasts even as the central bank tightened policy.
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