Economics bulletin 07 October

Date : 06 October 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.

Lower productivity for food retail and eating out

IGD’s latest research reveals that the retailing and eating out sectors are underperforming productivity growth across the rest of the UK food and consumer goods industry.

This is one of three productivity gaps discussed in our latest Viewpoint Special: Three productivity gaps for UK food and drink. Click here to read our latest findings

Shopper confidence rises slightly

IGD’s Shopper Confidence Index rose (2 points) in September but remains at historic lows (-25). The announcement of the Energy Price Guarantee earlier in the month helped confidence rise slightly.

Confidence declined to -30 in the final week of September as the IMF raised concerns about the Chancellor’s Growth Plan.

Mortgage rates hit 14-year high

The interest rate on the average two-year mortgage is above 6% for the first time in 14 years. There has been a sharp increase in mortgage rates since the announcement of the Growth Plan.

Analysts have revealed that if interest rates were to reach 6% in 2023, the average mortgage repayment will rise by around £4,800 a year compared to December 2021. The Bank of England will announce any changes to the current policy rate on 3rd November.

Petrol price rise fears

There are increased fears that petrol prices will increase further as a result of the decision by the Organization of the Petroleum Exporting Countries (OPEC) to reduce the amount of oil that is exported.

Sharp rise in CO2 prices

CO2 prices have risen by 3000% over the past year. Analysis suggests that the UK’s food and drink sector could incur £1.7bn in extra costs if gas prices remain high.

CO2 is a by-product of fertiliser production and last month, CF industries announced that they were temporarily halting ammonia production at it’s Billingham plant due to the rising cost of natural gas.

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