Despite an upward revision to annual growth in 2021, downward revisions across the quarters of 2022 mean that real GDP is now estimated to be 0.8 per cent below its pre-coronavirus (COVID-19) pandemic level, revised from the previous estimate of being 0.4 per cent below, according to the ONS.

Nominal GDP is estimated to have increased by a revised 1.6 per cent in Q3 2022, while it is now 8.4 per cent higher than the same quarter a year ago. The implied GDP deflator rose by a revised 1.9 per cent in Q3 2022 compared with Q2 (Apr to June) 2022, which was primarily driven by higher price pressures for household consumption.

There were also increases in the implied price of gross fixed capital formation and exports. This was partly offset by a 5.4 per cent increase in import-implied prices in part reflecting the higher price for fuels. Imports get subtracted from GDP so a strong price rise in fuel imports acts to reduce the GDP implied deflator increase.

The implied GDP deflator represents the broadest measure of inflation in the domestic economy, reflecting changes in the price of all goods and services that comprise GDP. It is important to note that the GDP deflator covers the whole of the economy, not just consumer spending.

Compared with the same quarter a year ago, there was a 6.4 per cent increase in the implied GDP deflator, revised from a first estimate of 5.8 per cent. This has been driven by strong rises for the implied price of household consumption (9.2 per cent), gross capital formation (14.7 per cent), and exports (14.9 per cent). There have also been large, implied price movements in imports (22.5 per cent). This fall in the terms-of-trade reduces the increase in the implied price of GDP, as imports are not produced domestically.

In Q3 (July to Sept) 2022, output is now estimated to have fallen by 0.3 per cent. This was revised from a first estimate fall of 0.2 per cent, mainly reflecting revisions to estimates of production and construction output.

Fibre2Fashion News Desk (NB)