Period covered: September 24Published: September 02, 2024Read time: 1min

Economic Monitor

Economic Monitor: GDP 0.9% higher than a year ago

Strong economic growth continued over Q2 2024, with GDP expanding 0.6%, following growth of 0.7% in the preceding quarter. So far, stellar performance has coincided with a return to GDP per head rising, suggesting growing consumer purchasing power. Indeed, our most recent Customer Sentiment Monitor suggests the outlook surrounding personal finances remains stable.

However, rising energy bills mean that inflation will experience some upward impetus over the coming months, with the housing and energy component starting to push up on the headline rate of inflation, particularly over Q4. Goods deflation is expected to persist; however, services inflation is likely to continue sustaining inflationary pressures into early 2025. This will limit the pace of interest rate cuts and push the bulk of any cuts into next year.

Risks remain skewed to the upside in further commodity price movements, and although prices eased on the month, they remain higher than a year ago. Natural gas prices pressed upwards, seeing heightened volatility following Ukraine’s incursion into Russia, though oil prices stepped back. This mixed picture is likely to culminate in a plateauing of business input costs, and as a result will keep cost burdens high.