Economics Bulletin 21 July

Date : 21 July 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 declines

Year-on-year CPI inflation for food and drink declined by 1 percentage point to 17.3% in June.

The continued decline in June is in line with our latest forecasts, indicating that food inflation has now peaked and will decline slowly over 2023. In December 2023 food inflation is predicted to be between 8% and 10%.

To read our full analysis on what is next for food inflation and how consumers are faring, download our latest Viewpoint report “Persistent inflation, politics and labour challenges”.

Overall inflation falls

The UK’s overall CPI inflation declined to at 7.9% in June 2023. This is a significant fall of 0.8 percentage points.

“Core” inflation, excluding the most volatile items such as energy, food, alcohol and tobacco, slipped back to 6.9%, compared to 7.1% in May. The previous month’s result was the highest rate for 30 years.

A fall in the “core” inflation rate will come as a relief to policymakers and the Bank of England. This may be an early indication that strong wage rises are not being embedded into the economy as previously feared.

See our article on inflation here for our full analysis.

Threat to grain supplies

Wheat prices have risen sharply, after Russia allowed the Black Sea Grain Initiative, which allowed the safe passage of Ukrainian grain, to expire. This increases welfare implications in parts of the world that are reliant on Ukrainian wheat exports, such as North Africa and the Middle East.

The expiration of the deal is likely to have a limited impact on UK consumers at this stage as only 2% of UK wheat imports pre-war came from Ukraine. However, if wheat prices continue to rise, this could adversely impact food price inflation.

Price rise investigation

The Competition and Markets Authority (CMA) has announced that high food inflation has not been driven by weak retail competition, and rising costs have not been passed on in full to consumers amid the period of food inflation.

The CMA also set out recommendations for retailers and government after raising concerns about the consistency and transparency in unit pricing across supermarkets and variety retailers.

They have also announced that the next phase of work will focus on 10 key product categories that merit further analysis, including bread and milk.


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