Economics bulletin 16 June

Date : 15 June 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 inflation and household incomes

Food price inflation will decline slowly in 2023 and will continue to have a significant impact on household disposable incomes.

Our LATEST forecasts, indicate that food inflation is expected to be between 8% and 10% by the end of this year compared to 19% currently.

IGD Viewpoint – There will continue to be a significant divergence between food price inflation and all items inflation. There is a significant risk that the food industry will be seen as an outlier and slow to bring prices under control.

Download our new Viewpoint Special: Exploring what’s next for food inflation or read the Executive Summary to understand the impact food inflation is having on consumers.

18 months of real pay decline

Average weekly earnings (including bonuses), was up 7.5% year-on-year in April. This is the highest growth rate on record, outside of the COVID-19 period.

However, real wages, after adjusting for the impact of inflation, continue to fall and has now been declining for 18 months on record.

IGD Viewpoint – This is adding to the pressure on household budgets. It will take an extended period of very strong pay growth to rebuild the losses to household incomes already suffered.

See our article here for our full analysis of pay.

Record numbers out of work due to sickness

Since the pandemic, the number of those economically inactive due to sickness has been rising and has again hit a record high of nearly 2.6 million. This compares to 2.1 million in the period January to March 2020.

To read further analysis, see here.

Slight GDP growth

UK economic activity grew by 0.2% in April 2023, following a fall of 0.3% in March 2023. GDP is estimated to have grown by 0.1% in the previous three-month period.

The services sector returned to growth in April, up 0.3% and was the main contributor to growth. The manufacturing sector fell by 0.3% and was the largest negative contributor. Retail sales excluding motor vehicles and motorcycles, grew by 0.5% in April.

Register here for our next Viewpoint webinar on 13 July to hear more about our commentary on the state of the economy.

Target Operating Model Update

The Government is consulting on the proposed methodology and rates of the Common User Charge. The charge is designed to recover operating costs for government-run Border Control Posts once the Target Operating Model comes into force later this year.

The consultation will run until 9th July 2023. Businesses can respond here or via email to [email protected].

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