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.
GDP declines in Q2
GDP declined by 0.1% in Q2 compared to an increase of 0.8% in Q1 2022. Provisional data for June suggests that GDP declined by 0.6%. This follows a forecast by the Bank of England that the UK economy will enter recession from the fourth quarter this year.
IGD believes that the UK is heading towards a long period of stagflation. To understand more about this including what policy makers can do to tackle this, watch our latest short video here.
Energy bills to be higher than expected
Average annual household energy bills are likely to rise to over £3,500 from October, a rise of over 80%, and could reach £4,200 in January 2023, according to the latest forecasts from independent analysts.
Ofgem is due to announce the energy price cap on 26th August that will apply to most variable tariff energy bills from 1 October 2022 to 31 December 2022.
Households cutting back on food spending
More than a third of people are cutting back on food spending in order to manage household budgets during the cost -of -living crisis, according to ONS data. The most deprived households across England are the most impacted, with more than 40% cutting back on food and essentials.
IGD believes that this is the calm before the storm for consumers, many of whom will be severely impacted by higher inflation. Watch our short video here to find out more about the outlook for consumers.
Crop shortages due to drought
The UK may face crop shortages later in the year, due to low levels of rainfall in 2022. Crop shortages coupled with higher agricultural input costs, will continue to put upward pressure on food prices.
Earlier in the year, IGD forecast that food price inflation will average 11% over 2022, for more information please see our report here.
Felixstowe port strikes
An eight-day strike at Felixstowe, the UK’s busiest container port, looks set to go ahead from 21 to 29 August. The strike is likely to cause disruption to food and consumer goods supply chains. There is the possibility of goods being rerouted and backlogs developing.
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