Economics bulletin 18 November

Date : 17 November 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.

Autumn Statement

In a bid to return to financial stability following the short-lived Growth Plan, the Chancellor of the Exchequer has announced increased taxes and a reduction in public spending as part of the Autumn Statement.

Key measures include:

  • Freeze on income tax personal allowance, national insurance and inheritance tax thresholds
  • The threshold at which 45p tax rate becomes payable reduced from £150,000 to £125,000
  • Benefits and state pension to rise with inflation
  • National Living Wage to increase by 9.7% to £10.42 from April
  • Energy price guarantee to change to £3,000 from £2,500 for the average bill from April 2023 for a year
  • Additional cost-of-living payments for the most vulnerable
  • Nearly two thirds of properties will not pay more in business rates next year

New economic forecasts

The Office for Budget Responsibility (OBR) has published the latest outlook for the UK economy and public finances. Key findings include:

  • The UK economy is in recession from Q3 2022 and will last just over a year
  • Unemployment will rise from 3.5% to 4.9% in Q3 2024
  • Living standards to fall by the largest amount on record by 7% in total over 2023-24
  • The UK national debt will be £400bn higher than forecast in March
  • CPI inflation is expected to peak in Q4 2022, at around 11%, before slowing over 2023
  • Food price inflation is expected to remain above zero in 2023
  • Food prices will be flat over 2024, then rise slightly over 2025-27

See here for more details.

Record inflation

Inflation continues to rise and has reached 11.1% on the CPI index and 14.2% on the RPI index in October. This is the highest level in 41 years.

Food and drink CPI inflation moved to 16.2% in October. This is in-line with IGD’s revised food price inflation forecast.

See here for more details.

Real pay falling

Average weekly earnings were up 6.0% year-on-year. However, average wages, after adjusting for the impact of inflation, continue to fall. Using the wider RPI measure of inflation, real wages are now down about 6.4% versus 2021.

See here for more details.

High economic inactivity

The number of economically-inactive people in the UK continues to grow. The number of people of working age who do not have a job and are not actively searching for one reached almost 9 million in September’22 compared to 8.4 million in January’20. The key driver of growing inactivity is long-term ill-health.

See here for more details.

Foodservice businesses cutting hours

New ONS data has revealed that foodservice businesses were more likely than any other industry to say they plan to cut trading by at least two days per week in November 2022 to reduce energy costs.


More economic news and analysis

Sign up to our bulletin

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