Economic and Microdata Insights

1. ONS Economic Forum
Chair – Sumit Dey-Chowdhury
@ONSfocus #ONSEconForum slido #15502
Deputy Director
Economic and Microdata Insights
Office for National Statistics

2. Agenda
09:30am – 09:35am Welcome and introduction – Sumit Dey-Chowdhury, Deputy Director, Economic
and Microdata Insights, Office for National Statistics
09:35am – 09:50am State of the UK Economy – Grant Fitzner, Chief Economist, ONS
09:50am – 10:00am The Role of Demand and Supply Factors in CPI Inflation – Kathryn Keane, ONS
10:00am – 10:10am How discretionary spending has been affected in recent winters – Iasmina
Ursul, ONS
10:10am – 10:25am Questions and Answers
10:25am – 10:30am Closing remarks – Sumit Dey-Chowdhury, Deputy Director, Economic and
Microdata Insights, ONS
@ONSfocus #ONSEconForum slido #15502

3. State of the UK Economy
March 2023
Grant Fitzner
Chief Economist
Director, Macroeconomic and
Environment Statistics and Analysis
@GrantFitzner
@ONSfocus #ONSEconForum slido #15502

4. Public finances have evolved better than expected this FY
0
20
40
60
80
100
120
140
160
180
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
£
Billions
Public sector net borrowing, FY 2022-23
Outturn Forecast
Source: Office for Budget Responsibility Source: Office for Budget Responsibility, ONS Public sector finance
@ONSfocus #ONSEconForum slido #15502

5. UK growth forecasts still point to a challenging 2023
Source: ONS – First GDP estimate; OBR – Nov 2022 EFO
94
95
96
97
98
99
100
101
102
103
104
105
2021 Q3 2022 Q2 2023 Q1 2023 Q4 2024 Q3 2025 Q2 2026 Q1
Q4
2019
=
100
Quarterly UK GDP: Actual and forecast
OBR - November EFO ONS - Quarterly GDP -2%
0%
2%
4%
6%
8%
10%
12%
Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023
Monthly UK GDP: Growth on a year ago
Source: ONS – Monthly GDP estimate (ED2R)
@ONSfocus #ONSEconForum slido #15502

6. Industrial action and higher economic inactivity
0
100
200
300
400
500
600
700
800
Jun Jul Aug Sep Oct Nov Dec
Days
lost,
Thousands
Days lost to labour disputes, June-Dec 2022
Manufacturing
Construction
Transport, storage, information and communication
Finance, real estate, Professional, Scientific, technical, and
Administrative and Support Services
Public administration and defence
Education
Health and social work
Source: ONS – Labour Disputes
-100
0
100
200
300
400
500
600
700
Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Aug-22
Thousands
Change in economic inactivity vs Feb 2020
16 to 24 years 25 to 34 years
35 to 49 years 50 to 64 years
Economically inactive (16-64)
Source: ONS – Labour Force Survey
@ONSfocus #ONSEconForum slido #15502

7. Investment remains a challenge in the UK
Source: ONS – National Accounts First Quarterly Estimates Source: IMF
0
5
10
15
20
25
30
2000 2003 2006 2009 2012 2015 2018 2021
G7 Investment as % GDP, 2000 - 2021
United Kingdom Max Min excl. UK
70
80
90
100
110
120
130
140
150
160
2010 Q1 2013 Q1 2016 Q1 2019 Q1 2022 Q1
2015
Q1=100
UK business Investment, 2010 - Q4 2022
Outturn
2010-2015 trend growth
@ONSfocus #ONSEconForum slido #15502

8. Business challenges easing, a mixed picture on profit margins
Source: ONS – Business Insights and Conditions Survey Source: ONS – Profitability of UK companies
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
77
76
75
74
73
72
71
70
69
68
67
66
65
64
63
62
61
60
59
58
57
56
55
54
53
52
51
BICS Wave
Main business concerns, Mar 2022 to Mar 2023
Energy prices Falling demand of goods and services
Supply chain disruption Competition
No concerns for my business Inflation of goods and services prices
-10
-5
0
5
10
15
20
25
30
2012 Q4 2014 Q2 2015 Q4 2017 Q2 2018 Q4 2020 Q2 2021 Q4
Net
rate
of
return,
SA
(%)
Net rate of return for UK companies
Manufacturing
Services
UK continental shelf companies
Pandemic
begins
Ukraine
invasion
@ONSfocus #ONSEconForum slido #15502

9. Inflation remains a policy focus over the next year
Source: ONS – Consumer Prices Index; Bank of England
Monetary Policy Report Feb 2022
Source: ONS, National Gas Transmission, BMRS/Elexon
-2
0
2
4
6
8
10
12
Percentage
points
Contributions to CPI: Actual and forecasts
Other Energy CPI inflation
0
200
400
600
800
1000
1200
Jan 2021 Jul 2021 Jan 2022 Jul 2022 Jan 2023
Mar
2021
=
100
UK gas and electricity prices, 2020 - 2023
Gas pkWh Electricity £MWh
@ONSfocus #ONSEconForum slido #15502

10. Summing up
• Public sector borrowing lower than expected this FY
• UK economy has seen no growth over the last 3 months or
year, but appears to have avoided recession in 2H 2022
• UK investment low by both historical and international standards
• Business challenges have eased somewhat over past 6 months
• Global food and energy price pressures have eased over
the past year, but cost of living pressures remain elevated
@ONSfocus #ONSEconForum slido #15502

11. Office for National Statistics
The role of demand and
supply factors in CPI
inflation
Kathryn Keane
@ONSfocus #ONSEconForum slido #15502

12. Background
The return to double-digit CPI inflation
• Re-opening of economies in 2021 – changes in the level and composition of
spending (‘Demand’)
• Supply bottlenecks had formed in the global economy (‘Supply’)
• The invasion of Ukraine (‘Energy’)
Based on ECB research, we classify goods or services at the 85 CPI-class
level particularly affected by reopening of the economy or supply bottlenecks
– transparency in understanding the role of changes in demand and supply.
@ONSfocus #ONSEconForum slido #15502

13. ‘Demand’ vs ‘Supply’
Reopening of the economy Supply bottlenecks
Clothing and footwear New motor cars
Recreation and culture Second-hand motor cars
Hotels/motels Spare parts and accessories for personal
transport equipment
Domestic and international flight prices Household furnishings and equipment (including
electronics)
@ONSfocus #ONSEconForum slido #15502

14. Supply and demand have been pushing up
inflation since the pandemic (1)
• Supply and demand imbalances in
product and labour markets have
been much larger than usual due
to the pandemic
• These contributions became more
prominent in mid-2021, similar to
EA experience
• Fall back in these demand and
supply impacts more recently
-1
0
1
2
3
4
5
6
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Per
cent
Contributions to the 12-month rate of CPI from core
components, UK, January 2019 – December 2022
Supply Disruptions and Bottlenecks Reopening of the Economy Rents Other
@ONSfocus #ONSEconForum slido #15502

15. Supply and demand have been pushing up
inflation since the pandemic (2)
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Per
cent
Contributions to CPI from reopening the economy
components, January 2019 – December 2022
Clothing and footwear Air fares Recreation and culture Accomodation services
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Per
cent
Contributions to CPI from supply disruption and bottleneck
components, January 2019 – December 2022
Furniture, household equipment and maintenance Motorcylces and bicycles
New cars Second-hand cars
Spare parts and accessories
@ONSfocus #ONSEconForum slido #15502

16. Conclusions
Product and labour market
imbalances help explain the recent
increase in consumer prices
• Compared with a ‘normal’ period,
these affected goods and services
have exhibited higher inflation
through 2021 and 2022
• It is not only the direct effects of
higher energy prices that have
driven up higher consumer price
inflation
Reopening
of the
economy
Supply
disruptions
Food
and
Energy
Rents Other CPI
2012-
2019
0.36 0.10 0.40 0.13 0.83 1.80
2020 0.20 0.15 -0.27 0.12 0.65 0.85
2021 0.46 0.54 0.72 0.15 0.71 2.59
2022 1.56 1.06 4.44 0.31 1.68 9.00
Contributions to 12-month CPI inflation, Jan 2012 - Dec 2022
@ONSfocus #ONSEconForum slido #15502

17. Office for National Statistics
How discretionary
spending has been
affected in recent winters
Iasmina Ursul
@ONSfocus #ONSEconForum slido #15502

18. Background and data sources
• This work looks at the impacts on discretionary consumer spending over the
festive winter period in light of inflation, industrial action, adverse weather etc,
and assess how spending this year compares to previous years
• Main data source: Revolut card spend data (credit/debit card transactions)
• Caveats: (1) Revolut data are nominal values (not adjusted for inflation);
(2) analysis on a “per-account” basis to adjust for Revolut’s user-base growth
• Other data sources: Retail Sales Inquiry, Opinions and Lifestyle Survey
@ONSfocus #ONSEconForum slido #15502

19. Inflation sees retail sales volumes and values
diverge
• This growing wedge shows how
consumers now must spend
more to maintain their standard
of living.
Volume and value sales, seasonally adjusted, Great Britain, December 2019 to December 2022
Source: Retail Sales Inquiry
@ONSfocus #ONSEconForum slido #15502

20. Consumer spending patterns in winter 2022 to
2023 were similar to previous winters
• No substantial changes in
spending patterns in
comparison to previous
years.
• No clear impact of
industrial action on 13-14
and 16-17 dec 2022 and 3-
7 Jan 2023.
Total Revolut card spending, 17 Nov 2019 to 4 Jan 2023, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

21. Clothing and footwear card spending was in line
with previous winter patterns
Revolut card spending on clothing and footwear, 17 Nov 2019 to 4 Jan 2023, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

22. There has been no substantial change in the
patterns of Revolut card spending on food and drink
Revolut card spending on Food and Drink, 17 Nov 2019 to 4 Jan 2023, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

23. Industrial action on the railways appears to have had only a
small negative impact on Revolut card spending on total travel
On the 13 to 14, 16 to
17 December 2022,
and 3 to 7 January
2023, industrial action
on many parts of the
rail network took
place.
Revolut card spend on travel, 17 Nov 2022 to 4 Jan 2019, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

24. Entertainment and hospitality spending patterns
were in line with previous winter patterns
Revolut card spending on entertainment and hospitality, 17 Nov 2019 to 4 Jan 2023, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

25. Household goods show no significant decline in the
value or patterns of Revolut card spending
Revolut card spending on household goods, 17 Nov 2019 to 4 Jan 2023, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

26. Factors specific to this winter did not cause significant reductions
on the online or in-store proportions of Revolut card spending
Revolut card spending, online or in-store, 17 Nov 2022 to 4 Jan 2023, October 2019 day of the week average = 100, UK
Source: Revolut
@ONSfocus #ONSEconForum slido #15502

27. Conclusions
• Between November 2022 and January 2023, UK consumer spending (as
measured by Revolut card spend) proved more resilient than many would
have expected
• This analysis suggests that consumer spending over the winter was more
impacted by regular factors, such as Black Friday, Boxing Day, and New
Year’s Day, rather than ones specific to this winter, such as rising prices,
the World Cup or industrial action
@ONSfocus #ONSEconForum slido #15502

28. Closing remarks
Chair – Sumit Dey-Chowdhury
@ONSfocus #ONSEconForum slido #15502
Deputy Director
Economic and Microdata Insights
Office for National Statistics

29. Forthcoming ONS economic analysis
13 March 2023 Consumer price inflation basket of goods and services: 2023
14 March 2023 Labour Market Theme Day
21 March 2023 Migration and the labour market (Census 2021)
22 March 2923 The changing picture of short-term international migration in England and Wales (Census 2021)
22 March 2023 Housing affordability in England and Wales: 2022
22 March 2023 Prices Theme Day
23 March 2023 Estimates of payrolled employees by nationality and region: July 2014 to December 2022
24 March 2023 Effect of private rental prices on the cost of living, 2022 [title tbc]
28 March 2023 The employment-population ratio and changes in the UK labour market
30 March 2023 The impact of winter pressures on different population groups in Great Britain: 15 to 26 February
2023
31 March 2023 Quarterly National Accounts day
All information on upcoming analysis can be found via the ONS website
@ONSfocus #ONSEconForum slido #15502

30. Dates for your diary
22 March 2023 Shaping the way ahead – the statistics for the public good strategy
23 March 2023 ESCoE Research Webinar – Do energy improvements pay for themselves in the
housing market?
30 March 2023 ESCoE Research Webinar – The impacts of nationwide minimum wage changes
17 April 2023 ONS Economic Forum
19 April 2023 ONS Business data and statistics user event
11 May 2023 Annual Crime and Justice Statistics Forum
Further details on the above event and any upcoming events will be published at
ons.gov.uk/economicevents
@ONSfocus #ONSEconForum slido #15502

31. A 'Cost of Living Insights' tool
ONS and the GSS have produced a
wealth of data and insight on the cost
of living over the past year.
In December we brought these data
and insights together for the first time
into a new Cost of Living Insights tool.
@ONSfocus #ONSEconForum slido #15502

32. Thank you for attending the
Economic Forum
You can keep up to date on all upcoming events via
ons.gov.uk/economicevents
If you would like to ask a question or provide any feedback, please do so
via economic.engagement@ons.gov.uk