Viewpoint Special: Rebuilding economic resilience in the UK food supply chain

Date : 31 August 2023

Our quarterly report analyses the economic, political and shopper landscape for the industry. The report will highlight what’s happening, the key issues impacting the supply chain and the emerging threats.

Food supply chain under pressure

Food inflation in the UK continues to outstrip ‘overall’ inflation and was recorded at 14.8% for July. This is a significant fall from the peak of 19.1% in March 2023 but remains very high by historical standards.

Food and drink price inflation remains above general inflation, which means that food and drink is still becoming more expensive relative to other items.

IGD research shows that consumers have been reporting weaker availability in food retail for some time. Trust in the ability of the industry to keep goods in stock has also been impacted.

Reduced on-shelf availability impacts choice for consumers and therefore quality of service. The combination of weaker availability and high and persistent food inflation points to a faltering supply chain, undermining the reputation of the food and consumer goods industry.

What are the issues?

The UK food and grocery supply chain has come under unprecedented pressure over recent years. Whilst the system has proven to be impressively resilient to some shocks, other shocks have had a greater impact.

The severe impacts of the war in Ukraine have exposed pre-existing fragility across the system in the following areas:

  • UK agriculture
  • The global food supply chain
  • Labour shortages
  • Confidence in investment

Emerging threats

Some factors that have disrupted the food and drink supply chain may be easing, whilst others are likely to be more persistent.

Several of the following disruptors are already emerging and may manifest over the next 24 months:

  • Border changes
  • Changes to the farm subsidy system
  • Climate change and extreme weather
  • Capital investment in food and drink manufacturing
  • Rising interest rates

Download our Viewpoint Special report: Rebuilding economic resilience in the UK food supply chain where we explore these issues in depth.

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