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The UK economy shrank in March as households began to feel the impact of rising prices and cut down on spending.

The economy contracted by 0.1% in March after no growth in February, the Office for National Statistics said.

In the first three months of the year the economy grew by 0.8%, which was driven by hospitality and travel industries recovering from coronavirus pandemic restrictions.

The ONS said the motor industry in particular was “struggling”.

The Bank of England has warned the UK faces a “sharp economic slowdown”, with prices rising at their fastest rate for 30 years, driven by soaring fuel, food and energy costs.

The Bank has forecast that inflation – the rate at which prices rise – could reach more than 10% by the end of the year.

“You can see the cost of living really beginning to bite,” said Darren Morgan, director of economic statistics at the ONS.

He added that trade in the retail sector had fallen “well below expectations”, with people cutting spending on “big ticket, non-essential sales”.

Mr Morgan also said March saw a large fall in fuel sales as people reduced the amount of car journeys they took due to the high cost of fuel at the pumps, driven by soaring global oil prices.

“The other industry we saw very much struggling is the motor trade industry. They are really struggling at the moment,” he said.

The Society of Motor Manufacturers and Traders has said March marked the “weakest” for new car registrations since 1998, as supply chain problems continue to hamper carmakers.

The ONS said a 15.1% fall in repairs of motor vehicles and motorcycles was the main factor behind the UK’s services sector shrinking in March.

However, it said the construction industry saw a strong month due to repairs needing to be carried out on homes and buildings following storms across in the UK in February.

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