Despite a busy month of sporting events, warm weather and holidays, economists have warned that the UK economy is likely to have shrunk partly due to increased energy costs for households.
Analysts have predicted that the Office for National Statistics will reveal a 0.1% drop in monthly GDP when growth figures are released on 11th September.
The 13% uplift to the energy price cap, conflict in the Middle East and increase in prices for energy-intensive materials are likely to have contributed to a weaker July for the economy.
Investec analysts said: “After a positive first half of the year, where the UK economy actually outperformed the rest of the G7, growing by 1%, we expect the third quarter will begin with a weaker performance.
“Some evidence of this has already been seen in soft retail sales for the month, whilst we expect the rise in household utility bills due to the 13% uplift to the energy price cap would have had a dampening effect.”
Meanwhile, the Bank of England’s July Agents’ summary reported subdued growth in private-sector activity, with many reporting higher cost and price pressures as a result of higher energy prices.
This comes alongside the organisation’s July business intelligence, which reported increased costs for metals, insulation, chemicals and other energy-intensive products but weak demand which limited their ability to pass those costs on.
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