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.
Supply chain concerns
In the latest consumer research conducted for IGD (22-24 August 2023), around six in ten adults (58%) experienced shortages of some food and groceries in-store or online recently. This has changed litle since last month (57%). Availability concerns remain significantly higher than when this was first measured in July 2021 (50%).
Unusually high and persistent availability concerns are a symptom of a faltering supply chain. We will be exploring the issues to supply chain resilience in our upcoming Viewpoint Special: Rebuilding resilience in the UK food supply chain, available to download for free from 7th September.
Recession risk rises
UK economic activity is predicted to fall by 0.2% in the three months to the end of September according to the UK’s Purchasing Managers Index, a leading indicator on the health of the economy. The index declined significantly in August to the lowest level since the January 2021 COVID lockdown.
Experts suggest that an economic contraction ‘already looks inevitable’ as a manufacturing downturn is accompanied by a faltering services sector.
Energy bills to fall slightly
Ofgem has confirmed that the Energy Price Cap will decline slightly by £151 to £1,923 for the period 1 October-31 December 2023 for a dual fuel household paying by direct debit based on typical consumption.
Energy prices are declining slowly and remain significantly higher than before the conflict in Ukraine. Households will actually only be paying slightly less than last winter, when typical bills were around £2,100 which included £400 of government support. Citizens Advice has reported a 17% increase year-on-year in the number of people contacting the charity for advice on their energy debts.
Target Operating Model update
The publication of the Target Operating Model is expected very soon. There have been reports in recent weeks of a further delay to checks on imports into the UK, however, at this stage checks on imports are expected to commence on 31 October.
The Target Operating Model will have significant impacts on the UK food and consumer goods industry. See our analysis of the plans.
Government borrowing lower than forecast
UK Government public sector borrowing for the month of July was the fifth highest on record, reaching £4.3bn. This is an increase of £3.4bn since July 2022. Borrowing in July is typically lower than in most other months due to receipts of self-assessed income tax.
Borrowing for the financial year to date has reached £56.6bn, which is £11.3bn lower than forecast by the Office for Budget Responsibility. Lower than expected government borrowing may allow the Chancellor to announce some tax cuts in the Autumn statement.
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Our round-up of the latest economic and political news, focused on FMCGs