Britain’s goods trade deficit with the rest of the world narrowed as expected in August as the value of exports rose to its highest level in a year, official statistics showed.

The Office for National Statistics said that the goods trade gap shrank to 6.853 billion pounds in August, in line with forecasts, from an upwardly revised 7.415 billion pounds in July.

The goods trade gap with non-EU countries narrowed to 3.902 billion pounds, also broadly in line with expectations.

“There was a big improvement between July and August, though this was partly due to an adverse revision to July’s figures,” said Philip Shaw, chief economist at Investec. “It would take a noticeable slowdown in domestic demand growth for the trend in the goods trade balance to improve.”

A breakdown of the figures showed the value of exports rose to 18.975 billion pounds, its highest since August 2006 and suggesting that strong global economic growth has outweighed the impact of the strong pound.

“Some of the detail is a bit more encouraging,” said Ross Walker, economist at RBS.

However, the oil deficit increased to 506 million pounds, its highest in a year, as annual maintenance work depressed U.K. production volumes and strong sales to the domestic market reduced exports.

Import prices excluding oil and erratics rose 0.2% in August after falling in the previous two months. However, on a 3-month/3-month basis, prices fell 0.4%, the biggest decline since April 2004.

The ONS said this fall was driven by a decline in the price of gas and electricity as well as precious stones and silver. (Reuters)