Economics bulletin 11 August

Date : 11 August 2023

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, policy developments and adapting to a new relationship with the EU.

Food prices to remain high

Higher food prices may be here to stay with a period of falling prices “something we may not be seeing for a while yet, if in the future at all” according to the Bank of England’s Chief Economist.

In our latest Viewpoint Special: Exploring what’s next for food inflation, we forecasted that food inflation will decline slowly to between 8 and 10% by the end of 2023, before returning to zero or near-zero in 2024. We have not forecast a period of significant price deflation

Monthly GDP announcement

According to ONS, UK economic activity grew by 0.5% in June 2023, following a fall of 0.1% in May 2023.

GDP is estimated to have grown by 0.2% in Q2 2023. This is stronger than in the previous quarter but still well below the pre-Covid average of about 0.5%.

IT and communications did well, with visual entertainment seeing a surge of activity – possibly due to arrival of Summer “blockbuster” movies.

Food and beverage service has also been singled out as an economic driver, with ONS attributing this to good weather in early Summer.

UK economy to recover slowly

The UK economy will have experienced five years of “lost growth” by the time it recovers to its pre-COVID size in late 2024, according to the latest research from the National Institute of Economic and Social Research.

The risk of recession remains high, as inflation will remain above the Bank of England’s 2% target until 2025. Read our full analysis here.

HGV drivers return to work

The UK pool of HGV drivers has returned to pre-pandemic conditions of persistent low level driver shortages. HGV drivers have returned to the sector, following the significant shortage in 2021, due to wage rises and better working conditions.

The latest report from Driver Require outlines that the industry is still failing to attract enough younger drivers to replace those retiring or leaving the workforce which could result in another labour shortage in future.


More economic news and analysis

Sign up to our bulletin

Our round-up of the latest economic and political news, focused on FMCGs