Inflation Report
May 2010
Demand
Chart 2.1 Contributions to quarterly growth in nominal GDP(a)
(a) At market prices. Contributions may not sum to total due to rounding.
Chart 2.2 Indicators of household spending on goods(a)
(a) Chained-volume measures.
(b) Excluding spending on purchases of vehicles and electricity, gas and other fuels. Data are only available to 2009 Q4.
Chart 2.3 Contributions to annual growth in real post-tax
labour income
(a) Household taxes are income tax and Council Tax.
(b) Divided by the household expenditure deflator.
(c) General government benefits minus employees’ National Insurance contributions.
(d) Calculated as wages and salaries plus mixed income, divided by the household expenditure deflator.
Chart 2.4 Indicators of consumer confidence
Sources: Research carried out by GfK NOP on behalf of the European Commission, Nationwide and YouGov.
(a) Unless otherwise stated.
(b) This aggregate confidence index is derived by averaging the answers to questions 1, 2, 3, 4 and 8 in the GfK NOP survey carried out on behalf of the European Commission.
(c) Overall prosperity index derived from the answers to questions 1, 2d, 4 and 5 of the YouGov survey. Differences from average since January 2003.
(d) Differences from average since May 2004.
Chart 2.5 Business investment and GDP(a)
(a) Chained-volume measures.
(b) Recessions are defined as at least two consecutive quarters of falling output (at constant market prices) estimated using the latest data.
The recessions are assumed to end once output began to rise.
Chart 2.6 Factors limiting investment by sector: uncertainty
about demand(a)
Source: CBI.
(a) The question asks whether uncertainty about demand is likely to limit capital expenditure authorisations over the next twelve months.
(b) Covers the consumer, business and professional service sectors. The services balances are available from 1998 Q4
Chart 2.7 Financial balances by sector
(a) Recessions are defined as in Chart 2.5.
(b) Includes non-profit institutions serving households.
(c) Excludes public corporations.
Chart 2.8 Stockbuilding(a)
(a) Chained-volume measures. Excluding the alignment adjustment.
Chart 2.9 Public sector net borrowing(a)
Sources: HM Treasury and ONS.
(a) The chart shows financial year net borrowing data. The orange bars show data consistent with the projections published in the Budget on 24 March 2010.
The chart has not been updated to reflect the public sector finances data released on 22 April 2010.
Chart 2.10 Domestic demand in selected euro-area countries(a)
Sources: Eurostat and ONS.
(a) Chained-volume measures. The figures in parentheses show the shares of UK nominal exports accounted for by each country in 2008.
Chart 2.11 Contributions to quarterly growth in US GDP(a)
Source: Bureau of Economic Analysis.
(a) Chained-volume measures.
Chart 2.12 UK goods exports and world imports of goods(a)
Sources: CPB Netherlands Bureau for Economic Policy Analysis and ONS.
(a) Volume measures.
(b) Data are weighted by shares in world imports.
(c) Excluding the estimated impact of MTIC fraud.
Tables
Table 2.A Expenditure components of demand(a)
Percentage changes on a quarter earlier
Averages
2009
1997–2008
Q1
Q2
Q3
Q4
Household consumption(b)
0.7
-1.6
-0.9
0.0
0.3
Government consumption
0.6
-0.4
0.9
0.6
1.0
Investment
1.0
-7.3
-7.2
2.8
-2.7
of which, business investment
1.2
-8.9
-11.5
-0.8
-4.3
of which, dwellings investment(c)
0.3
-6.7
-4.3
3.3
-6.4
Final domestic demand
0.7
-2.2
-1.5
0.5
0.1
Change in inventories(d)(e)
0.0
-0.7
1.0
0.0
0.2
Alignment adjustment(e)
0.0
0.6
-0.4
-0.6
0.6
Domestic demand
0.7
-2.4
-1.0
-0.1
0.8
‘Economic’ exports(f)
0.9
-7.2
-1.9
0.6
3.8
‘Economic’ imports(f)
1.2
-6.5
-3.0
1.2
4.7
Net trade(e)(f)
-0.1
0.0
0.4
-0.2
-0.3
Real GDP at market prices
0.6
-2.6
-0.7
-0.3
0.4
(a) Chained-volume measures.
(b) Includes non-profit institutions serving households.
(c) Whole-economy dwellings investment.
(d) Excludes the alignment adjustment.
(e) Percentage point contributions to quarterly growth of real GDP.
(f) Goods and services, excluding the estimated impact of missing trader intra-community (MTIC) fraud.
Table 2.B Mortgage arrears and repossessions
2008
2009
Series high
H1
H2
H1
Q3
Q4
Mortgage arrears(a)
Three to six months
1.82
(1994 H1)(b)
0.73
1.01
1.07
1.00
0.97
Six to twelve months
2.07
(1992 H2)
0.41
0.62
0.86
0.85
0.81
More than twelve months 1.58
(1993 H1)
0.15
0.25
0.55
0.56
0.60
4.12
(1995 H1)
1.19
1.57
1.86
1.77
1.72
0.40
(1991 H2)
0.16
0.18
0.22
0.21
0.20
By more than 2.5%
of outstanding balance
Repossessions(c)
Source: Council of Mortgage Lenders.
(a) Mortgages in arrears as a percentage of outstanding mortgages, at the end of the specified period.
(b) Earliest observation.
(c) Flow of repossessions during each period, as a percentage of outstanding mortgages. For each quarter, the observation is based on the flow of repossessions over that quarter
and the preceding one, and the stock of outstanding mortgages in that quarter.
Table 2.C Surveys of investment intentions (plant and
machinery)(a)
Net percentage balances
Averages
2008
2009
2010
1999–2007
H1
H2
H1
H2
Q1
BCC
14
7
-14
-23
-7
-5
CBI
-7
-7
-44
-45
-19
-13
Sources: BCC, CBI, CBI/PwC and ONS.
(a) Net percentage balances of companies who say they have increased planned investment in plant and machinery over the past three months (BCC), or revised up planned investment
in plant and machinery over the next twelve months (CBI). Measures weight together sectoral surveys using shares in real business investment. BCC data are non seasonally
adjusted and cover the manufacturing and services sectors. CBI data cover the manufacturing, distribution, financial services and consumer/business and professional services
sectors.
Table 2.D General government deficits and gross debt in
selected euro-area countries in 2009
Percentages of nominal GDP at market prices
General government
deficit(a)
General government
debt(b)
Greece
14
115
Ireland
14
64
Italy
5
116
Portugal
9
77
11
53
Spain
Source: Eurostat.
(a) Net borrowing is total general government expenditure minus total general government revenue.
(b) General government consolidated gross debt.
Table 2.E GDP in selected Asian economies(a)
Percentage changes on a quarter earlier(b)
Averages
2009
2010
1997–2008
Q1
Q2
Q3
Q4
Q1
Japan (2.1)
0.2
-3.6
1.5
-0.1
0.9
n.a.
China(c) (1.8)
9.6
6.2
7.9
9.1
10.7
11.9
Singapore(d) (1.5)
1.2
-1.8
3.8
2.8
-0.7
7.2
India(e) (1.4)
2.7
4.1
-8.4
2.1
8.8
n.a.
Hong Kong (1.4)
1.0
-11.3
1.6
7.6
5.7
n.a.
South Korea (0.9)
1.0
0.2
2.4
3.2
0.2
1.8
Sources: Ministry of Trade and Industry Singapore, ONS, Thomson Reuters Datastream and Bank calculations.
(a) Chained-volume measures. The figures in parentheses show shares in UK nominal exports in 2008. Data for China, Hong Kong and India are non seasonally adjusted.
(b) Unless otherwise stated.
(c) Chinese data show annual GDP growth. Average is between 2000 Q1–2008 Q4.
(d) The 2010 Q1 observation is based on an advance estimate that has been de-annualised.
(e) Average is between 2004 Q3–2008 Q4.
Recent developments in
UK imports
Chart A UK imports and import-weighted demand(a)
Sources: ONS and Bank calculations.
(a) Chained-volume measures.
(b) Excluding the estimated impact of MTIC fraud.
(c) Calculated by weighting household consumption (including non-profit institutions serving households), whole-economy investment (excluding valuables), government spending,
stockbuilding (excluding the alignment adjustment) and exports (excluding the estimated impact of MTIC fraud) by their respective import intensities. Import intensities are estimated
using the United Kingdom Input-Output Analytical Tables, 1995.
Chart B UK import penetration and relative import prices(a)
Sources: ONS and Bank calculations.
(a) The vertical lines mark the beginning of the major nominal exchange rate movements that began in 1992 Q3 (a depreciation), 1996 Q2 (an appreciation) and 2007 Q3 (a
depreciation).
(b) Import prices divided by the GDP deflator.
(c) UK imports as a proportion of import-weighted demand. Import and export data exclude the estimated impact of MTIC fraud.