The UK’s Gross domestic product (GDP) rose 0.8% over January this year, following a drop of 0.2% in December 2021.
A report by the Office of National Statistics (ONS) noted that all sectors grew in January, with a 0.8% increase in services, a 0.7% increase in production and a 1.1% rise in construction.
Food and beverage growth achieved a 6.8% boost, leading to a 1.7% output in consumer-facing services after the economy recovered from the shock of the Omicron variant.
Wholesale and retail trade also enjoyed a rise of 2.5% and proved the major contributor to January’s rise in services.
However, analysts warned that the Ukraine conflict will place households under pressure, with higher energy bills imminent and set to eat into consumer budgets.
The higher bills are predicted to see a downturn in growth as household savings are put towards rising gas and oil costs.
The Bank of England will be under scrutiny as it attempts to mitigate the spiralling effects of inflation under the combined weight of Covid-19 and Russia’s assault on Ukraine.
“The Bank of England’s main task is to maintain stable prices and oversee financial stability, and rip-roaring inflation risks undermining that and overall economic health,” said Hargreaves Lansdown senior analyst Susannah Streeter.
“So steering inflation back to the target of 2% is still set to be its priority and it’s still highly likely a rate rise will be on the cards when policy makers meet next week.”
“But given the escalating situation, with fresh sanctions being placed on Russian oil exports and severe disruptions to other commodities, which is set to weigh on businesses and consumers, policymakers are expected to limit the rise to 0.25%, pushing the bank rate to 0.75%.”
“The aim will be to try and dampen demand but not squeeze this new spurt life out of the economy, at a time of increased uncertainty.”