Gross domestic product (GDP) in the UK grew 0.2% in July after a 0.6% decline the month before, according to the Office for National Statistics (ONS).
The biggest contributor to July’s GDP growth was from information and communication, which was up 1.5% over the month.
Economic growth over the three months leading to July had been flatter than normal as the cost-of-living crisis became more severe and UK households prepared for the worst by being more conscious of their outgoings.
Alice Haine, personal finance analyst at Bestinvest, said that hosting the Women’s Euro Championship and Commonwealth Games also had a sizable impact on GDP growth in July.
Likewise, she added that Liz Truss’ decision to freeze energy bills at £2,500 from October paints a much better economic outlook moving forward.
The coming winter months appeared bleak as the cost of basic services have skyrocketed, but the new price cap could mean that the UK “suffers a much milder recession than previously forecast, with inflation likely to peak in the fourth quarter several percentage points lower than feared”, she said.
However, Derrick Dunne, CEO of YOU Asset Management, said that the UK’s economic woes are far from over and July’s positive GDP results should be “taken with a pinch of salt”.
He added that the ONS’s data is a lagging indicator of economic activity and July’s findings could be particularly skewed by the two bank holidays within it.
“The current environment of political changes, recessionary rumours and surging energy prices serve to highlight why investors cannot afford to come off high alert,” said Dunne.
“With inflation set to remain high on Wednesday and yet more monetary policy action predicted next week, we will no doubt see more volatility in the months ahead.”