Bulletin: 2025 predictions, food inflation return, energy bills
22 November 2024Featuring 2025 predictions, new Viewpoint report, inflation and food inflation, energy bills, deposit return scheme..
2025 predictions
The top five predictions for 2025 from our new Viewpoint report, Can UK food prosper in 2025? are:
IGD expects that food inflation will be higher in 2025 than our previous forecast, although it is unlikely to return to the levels seen over 2022-23
One major business consequence of the Budget will be an increase in business costs. The burden of these measures makes margin recovery unlikely in 2025
Household disposable incomes will slow. IGD expects confidence and spending to vary across income groups
IGD anticipates that it may take some time before confidence improves significantly. Christmas shopping behaviour will be the first indicator of how much shoppers will need to cut back
Through 2025, it is expected that the government will move into delivery mode across a number of fronts, through cross cutting "mission boards" focused on delivering against the five government missions
Read our latest article for more details.
Food inflation return
The latest data from ONS shows that all items inflation has increased to 2.3% in October, up from 1.7% in September, when measured by the CPI method.
Inflation in food and drink held steady at 1.9%, which is within IGD’s summer inflation forecast, but towards the top end. Looking ahead, it is likely that business costs in the food and drink supply chain – and in other activities – will rise further. With business costs likely to rise and little margin available to absorb this, it is likely that at least some cost increases will need to be passed to consumers.
IGD plans to issue a new food inflation forecast in December 2024.
See our latest food inflation article here.
Energy bills increase
The energy regulator Ofgem has announced that the energy price cap for January-March 2025 will increase by 1.2%. The new price cap will be £1,738 per annum for a typical househould who use electricity and gas and pay by Direct Debit (compared to £1,717). This is due to an increase in wholesale energy prices.
DRS delay
The Welsh Government have pulled out of the UK Deposit Return Scheme (DRS), which it was hoped would be interoperable across the UK. This is because the UK Government (via the Internal Market Act 2000) will not allow them to include glass bottles in the scheme.
They will instead be creating their own Welsh DRS - that supports the transition to reuse for all drinks containers, in an already high recycling nation. The UK DRS is still due to go live in October 2027, but the Welsh DRS will now be launched at a later date.