UK growth was even weaker than initially estimated in the first quarter as household spending slowed more than expected.
Revisions by the Office for National Statistics to preliminary estimates of first-quarter gross domestic product showed that UK growth rose 0.2% quarter on quarter, revised down from 0.3%.
ONS said the unexpected move was mainly due to "broad-based downward revisions within the services sector. . . as consumer facing industries such as retail and accommodation fell and household spending slowed".
Chris Williamson at IHS Markit said: "The economy got off to an even worse start to the year than previously thought, according to fresh official data."
He added: "There’s a strong likelihood that growth will pick up in the second quarter, but whether robust growth can be sustained further ahead remains highly uncertain."
The flash estimate is published in the month following the quarter on record using mainly anecdotal evidence. This second estimate is produced about three weeks later using 80% of the total data required for the final output-based figure.
Spending power fades
The data supported recent evidence that rising inflation and flat wage growth was creating a squeeze on the spending power of British consumers, even though unemployment is at its lowest on record.
Consumer price inflation stood at 2.7% in April, while annual average wage growth was 2.4%.
While business activity surveys of British purchasing managers show a pick up in momentum at the start of the second quarter, the inflationary squeeze is seen worsening.
The Bank of England, earlier in May, revised higher its forecasts for consumer prices and now expects CPI to peak at 2.8% in the fourth quarter.
"It seems that the UK economy has been hit by the rising cost of living, largely caused by Brexit-related falls in sterling, and rising input prices worldwide," said Michael Baxter, economics commentator at The Share Centre.
He added: "Retail and accommodation took a particularly large knock, but it was a bad quarter for manufacturing and construction too."
Sterling takes a hit
If anything, said Williamson at IHS Markit, the squeeze on household finances worsened further in May as the IHS Markit Household Finance Index showed current finances worsening at its worst pace in three years.
He added: "While the [PMI] survey data for April offer a suggestion that second quarter growth maybe stronger than the 0.2% expansion seen in Q1, there’s every possibility that growth could wane again later in the year unless inflation eases and wages start to show stronger growth."
Sterling was hit, and in afternoon on Thursday, the pound was 0.2% lower against the dollar at $1.2953, and fell 0.1% versus the euro to €1.1553.