Economics bulletin 05 August

Date : 05 August 2022

Your overview of economic and policy news with a focus on the food and consumer goods industry. Featuring the latest developments and guidance on the rising cost of living, the Ukraine crisis, labour shortages, COVID-19 and adapting to a new relationship with the EU.

Inflation to peak higher

The Bank of England now expects inflation to peak at 13.3% in October 2022 and to remain at “very elevated levels throughout much of 2023.” Inflation was previously predicted to peak at just over 10%.

Interest rates rise

The Bank of England has increased interest rates by 0.5% to 1.75%, the largest rise in a quarter of a century. Interest rates are at their highest level since 2008. See here for our analysis.

The Bank of England is now forecasting the UK economy will enter recession from the fourth quarter this year.

Gain further insight on the outlook for the UK economy, and the impact of declining household incomes and rising inflation on shopper sentiment. Download our latest Viewpoint report here.

Energy price cap changes

Ofgem has confirmed that the energy price cap will be updated on a quarterly basis rather than every six months. Ofgem is expected to announce a significant increase in the price cap to take effect from October.

Shopper confidence remains at historic lows

Shopper confidence has risen slightly in July but remains at historic lows. IGD expects confidence to remain low following the announcement of the October energy price cap on 26th August.

For further insight, watch Michael Freedman, Head of Economic and Consumer Insight, discuss the latest results here.

ShopperVista subscribers can access the full report here.

Availability concerns ease slightly

Concerns about on-shelf availability remain high, despite declining over the last two months (63% vs 68% in May’22). To understand how the hot weather is impacting availability concerns, see here for full details of the latest shopper research conducted for IGD (29-31 July 2022).

Further supply disruption

Food and consumer goods supply chains are likely to face further disruption due to planned strikes at Felixstowe port in late August.

Felixstowe is the busiest container port in the UK and the strike raises the prospect of a backlog of goods developing in Felixstowe or goods being re-routed through other ports.

Labour shortages review

John Shropshire, former CEO of G’s Fresh Group, will chair the Independent Review Into Labour Shortages in the Food Supply Chain. The review, to be published in 2023, will consider recruitment challenges facing food businesses and discuss the roles that automation, domestic employment and migration can play.

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