The UK economy grew marginally in April helped by strong trade in bars and pubs but housebuilders and estate agents had a “poor month”, official figures show.

The economy grew by 0.2% in April after shrinking in March, the Office for National Statistics (ONS) said.

But the ONS said the construction sector had faltered as rising interest rates and mortgage costs made house buyers more cautious.

One housebuilder told the BBC people were “holding back” on buying homes.

The Bank of England has been raising interest rates to calm the rate at which prices are rising – which is known as inflation and currently stands at 8.7%.

As interest rates have risen and more people are coming to the end of fixed-rate mortgage deals, some lenders have been withdrawing certain mortgages from the market.

Ian Burns, who runs Cameron Homes in Staffordshire, said people are being “very cautious” and are “taking longer to make decisions”.

He said: “Over the past three or four weeks, we’ve seen a slowdown in reservations and ultimately, if that doesn’t pick up, then we have to slow down the build operation.

“We can’t just continue to build houses if we don’t have customers for them.”

The Bank of England is widely expected to lift interest rates again when its Monetary Policy Committee meets next week. It had been predicted to increase borrowing costs from 4.5% to 4.75%.

However, following stronger than expected wage growth in the three months to April – which, it is feared, will keep inflation higher for longer – the Bank is now predicted to raise interest rates to 5%.

Chancellor Jeremy Hunt said welcomed Wednesday’s figures from the ONS but warned that the UK needed to tackle inflation to “protect family budgets”.

For the three months to April, the economy grew by 0.1%.