GDP increases by 0.5%

Gross domestic product, preliminary estimate: October to December 2017 – ONS

  • UK gross domestic product (GDP) was estimated to have increased by 0.5% in Quarter 4 (Oct to Dec) 2017, compared with 0.4% in Quarter 3 (July to Sept) 2017.
  • The dominant services sector, driven by business services and finance, increased by 0.6% compared with the previous quarter, although the longer-term trend continues to show a weakening in services growth.
  • Production industries grew by 0.6%, boosted by the second consecutive quarter of strong growth in manufacturing.
  • Growth in manufacturing was partially offset in total production by a significant fall in oil and gas extraction, caused by the well-publicised repair work made to the Forties pipeline.
  • Construction contracted for the third quarter in a row, although annual growth between 2016 and 2017 was very strong at 5.1%, due to a strong start to 2017.
  • GDP was estimated to have increased by 1.8% between 2016 and 2017, slightly below the 1.9% growth seen between 2015 and 2016.

Inflation falling

UK consumer price inflation: December 2017 – ONS

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.7% in December 2017, down from 2.8% in November 2017.
  • Following a steady increase from late 2015, since April 2017 the CPIH rate has levelled off, ranging between 2.6% and 2.8%.
  • The downward effect came mainly from air fares, along with a fall in the prices of a range of recreational goods, particularly games and toys.
  • The downward contributions were partially offset by an increase in tobacco prices, reflecting duty increases that came into effect following the Autumn Budget, along with an increase in petrol and diesel prices.
  • The Consumer Prices Index (CPI) 12-month rate was 3.0% in December 2017, down from 3.1% in November 2017