Britain's economy showed zero growth in the final three months of 2022 - enough for it to avoid entering a recession for now - but faces tough prospects in 2023 as households continue to wrestle with double-digit inflation.

Monthly gross domestic product data for December - a month marked by widespread rail strikes and bad weather - showed a 0.5% contraction, the Office for National Statistics said, larger than the 0.3% forecast.

"The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022," said ONS statistician Darren Morgan said.

Output fell 0.2% in the three months to the end of September - when many businesses shut briefly to mark Queen Elizabeth's funeral - and a second consecutive quarter of falling output would have met Europe's usual definition of recession.

However, the respite is only likely to be temporary.

The Bank of England forecast last week that Britain would enter a shallow but lengthy recession, starting in the first quarter of this year and lasting five quarters.

British living standards have been hammered by a surge in inflation, which hit a 41-year high of 11.1% in October, and firms and households will also feel an increasing impact from the BoE's rapid increase in interest rates since December 2021.

Output in the fourth quarter was still 0.8% below its pre-pandemic level, in sharp contrast to other major advanced economies which are now above their pre-pandemic size.

ING economist James Smith said he expected Britain's economy to contract by 0.3-0.4% in the first quarter of this year, and by a smaller amount in the second quarter.

"Recession, or at least a technical one, remains the base case. But this looks like it is going to be very mild by historical standards, helped of course by the collapse in wholesale gas prices," he said.

Across 2022 as a whole, Britain's economy grew by 4.0% after 7.6% growth in 2021, as it recovered from a historic blow from the COVID-19 pandemic.

Finance minister Jeremy Hunt said the data showed the British economy was more resilient than expected, but still not clear of danger.

"There is underlying resilience in the UK economy, but we are not out of the woods - inflation is still much too high. That is causing pain for families up and down the country," he said.

(Editing by Kate Holton and Christina Fincher)