Economics bulletin 19 August

Inflation increases again

CPI inflation has reached another 40-year high of 10.1% in July. On the RPI measure, the broadest measure of household costs, inflation hit 12.3%.

Independent analysts are predicting that the energy price cap will rise by more than 80% from October. This is likely to push inflation higher than the Bank of England’s peak forecast of 13.3% in Q4 2022.

For more insight, please see here.

Food inflation forecasts

Food price inflation increased to 12.7% in July, the highest level since 2008. Rising food and drink prices are now the main contributor to overall inflation growth.

IGD forecasts that food inflation will reach 15%, with a +/- 1% margin of error, by the autumn.

Download our free Viewpoint Special: Exploring the outlook for food inflation here.

Real pay falling at record rate

Total pay continues to rise , up 5.1% in the 12 months to May 2022. However, adjusting for the impact of RPI inflation, pay has declined by 6.4% in the last year.

This is likely to have a further negative impact on consumer sentiment. Access to, and availability of, the most affordable food will be critical in allowing households to manage inflation. For further IGD insight, download our latest Viewpoint report here.

Vacancies fall again

The number of vacancies fell by 20,000 in June, but remains at historic highs. This is the third consecutive month that vacancies have fallen indicating that businesses are reconsidering their hiring options.

Developing countries trading scheme

Tariffs have been eased on a wide range of food and consumer goods imported from 65 developing countries. The Developing Countries Trading Scheme removes some seasonal tariffs on food, that should increase options and reduce costs for businesses importing certain products.