Economy grew by 0.2 percent

LONDON (Reuters) - The economy grew by 0.2 percent in the three months to June, the National Institute of Economic and Social Research said on Monday.

The think-tank said this followed growth of just 0.1 percent in the three months to May and assumes that retail sales fell back last month after the shock rise before.

"Although quarterly falls in output are possible in the near future, it remains most unlikely that output in 2008 will be lower than in 2007," the NIESR said in a statement.

"We remain of the view that, despite these data, inflationary pressures and the risk of rising inflationary expectations mean that there is no room to reduce interest rates, and that an increase may be needed."