The UK economy contracts as inflation “starts to bite”.

In Britain, the cost of living crisis is already putting a strain on the economy. Gross domestic product fell 0.1 percent in March after having been flat in February, the National Statistical Office he said Thursday, as spending declined.

The services sector, usually a key driver of economic growth, fell 0.2% in March from the previous month, driven down by a sharp decline in wholesale and retail activity, particularly for automobiles. While supply chain disruptions hindered production, separate data released last month showed this more broadly. retail sales fell by 1.4%. in March, because people are spending less on food and gasoline.

There are signs that families are cutting when prices rise to theirs The fastest pace of the past three decades, engine fuel prices records and economists predict that inflation could peak above 10% this year.

The cost of living is “really starting to bite,” Darren Morgan, the agency’s director of economic statistics, he told the BBC.

Overall, the economy grew by 0.8 percent in the first three months of the year, the statistical office said. The growth was fueled by the better-than-expected recovery in January, when restrictions were lifted following the Omicron wave of the coronavirus. Compared to other major economies, it was a good start to the year: the Tight 0.4 percent of the United Statesthe French economy remained flat and the German economy grew by only 0.2%.

But the outlook for the UK economy is weak and the risk of recession has intensified. The Bank of England said last week that he expects growth to slow in the second quarter as inflation-adjusted incomes continue to decline and supply chains are disrupted by the war in Ukraine and the persistent pandemic.

While the central bank has raised interest rates four times since December in an effort to stem inflation, bringing them to their highest level since 2009, politicians are divided on how many more rate hikes the economy can handle. The bank has predicted that the economy will contract by nearly 1% in the final quarter of the year. And for next year, on an annual basis, he also expects a contraction of the economy.

Much of the pain will come from a squeeze in disposable income, which is expected to be the second-largest decline since record-breaking in 1964, the central bank said. Wednesday the National Institute of Economic and Social Research, a London-based research organization, added to the depressing warnings. He said he estimated that 1.5 million households across Britain are expected to face food and energy bills in excess of their disposable income this financial year.

These perspectives are increasing the pressure on the British government take more decisive and targeted actions to support low-income people.

While slowing inflation is the top priority for the economy, doing so would be much easier if the Treasury provided “adequate buffer for the poorest households”, who have already suffered the most from the pandemic, Jagjit Chadha, director of the research team, he wrote in the report released Wednesday.