Including Andy Burnham's speech, food prices, energy prices, demographics, economic performance and geopolitics update.
Andy Burnham outlines economic plans
Andy Burnham, newly-elected Labour MP for Makerfield and likely next Prime Minister, has outlined his ideas for reforming government and driving economic growth. Key themes in the speech included extending devolution and developing place-based economic strategies built around industrial “clusters”. The proposals also reflect growing recognition of agri-food as a strategic national industry, linked to economic resilience, food security and regional growth. For food and drink businesses, this could support greater focus on domestic supply chains, productivity and long-term investment in the sector.
Read the full article – What Andy Burnham’s plan means for the food industry
IGD opinion
The most notable part of the speech for food businesses was a point only touched on in passing. Agri-food was recognised as a national asset, which must be protected and developed in order to boost national resilience. Food businesses are likely to welcome this, although detail on exactly what might be involved was not developed.
However, taking a wider view, it is not clear how devolving more decision-making power to regions or cities will actually result in higher governmental efficiency or better economic performance. So far, there is little evidence of current devolution delivering better performance for Northern Ireland, Scotland or Wales, even after more than 20 years.
Keep Britain Working: tackling economic inactivity
Over 250 employers, 10 mayoral authorities and all three devolved administrations are supporting the government's Keep Britain Working programme.
Nearly 200 workplaces are testing new approaches to help people stay in work despite ill health. A new Workplace Health Intelligence Unit will track sickness absence and return-to-work outcomes.
With 2.8 million people out of work due to long-term sickness, Sir Charlie Mayfield argues that better workplace health support is a major opportunity to boost growth and labour supply
IGD opinion
Keeping more people in work and helping young people enter the workforce are both essential to addressing long-term labour shortages. IGD's Feeding Britain's Future programme complements this agenda by connecting young people with career opportunities across the food and consumer goods industry.
Why food prices are unlikely to fall
Food inflation has eased from recent highs, but a broad and sustained fall in food prices remains unlikely. IGD forecasts food and drink inflation of 3.3 to 4.3% in 2026, reflecting ongoing structural pressures across the food system.
Key insights:
Food and drink inflation is forecast at 3.3–4.3% in 2026.
Many inflationary pressures are structural rather than temporary, meaning costs are unlikely to fall significantly.
History shows that periods of sustained food price decline are rare, with only one notable recent example, occurring between 2014 and 2016.
Productivity, efficiency and resilience are likely to be the most effective ways to support affordability and growth.
Read the full article – Why food prices are unlikely to fall
IGD opinion
For food businesses, the challenge is less about whether prices will fall and more about how to adapt to a world of structurally higher costs while maintaining affordability for shoppers.
Energy prices
01 July saw an increase in the Domestic Energy Price Cap. Maximum electricity unit prices rose by 6% and maximum gas unit prices by 28%, reflecting changes in wholesale markets.
This means that a typical domestic bill will rise by about 13% to £1,862 per year. (Note that the definition of a “typical” household is under review, due to changing consumption patterns).
Separately, energy analysts Cornwall Insights have forecast that there will be a small reduction in the Price Cap when it is renewed in October 2026.
Economic output stronger in Q1
Revised data from ONS shows that quarter-on-quarter GDP growth in Q1 2026 was 0.6% in real terms (no change from the provisional reading). Growth was 0.9% when measured against Q1 2025.
This represents a welcome improvement after fairly lacklustre growth over Q2-Q4 2025, although data would not reflect the impact (if any) of conflict in the Persian Gulf.
“Death Day” dawns
01 July marked “Death Day” in England and Wales, the point at which deaths began to exceed births, turning “natural” population change negative for the first time since 1976.
This is a notable demographic event, but the UK is not unusual in this regard. Taking a global view, almost all countries now have a fertility rate below the “replacement” level of about 2.1 babies per woman over her lifetime. This means that, unless something dramatic happens, almost all countries are now set for demographic contraction at some point in future.
Despite the collapse of birthrates in the UK, net immigration will remain positive right up to end of century, compensating for natural factors. In next 10 years alone, we will need to find food to feed another 2m people. Total population is not expected to stabilise until mid century at least, according to ONS projections.
Geopolitical briefing
Russian refineries attacked
Ukraine has delivered a major series of drone strikes against Russian oil and gas facilities. This has resulted in motor fuel shortages across the country. A Kremlin spokesman confirmed that Russia plans to import fuel in order to address this.
While the direct impact on UK food and grocery businesses is limited, the development highlights the continued vulnerability of global energy markets to geopolitical disruption.
Food businesses should continue to monitor energy prices, transport costs and supply chain risks, as prolonged disruption to oil and fuel markets could add to inflationary pressures and operating costs.
US and Iran exchange fire
An Iranian weapon system has struck a ship in the Strait of Hormuz, provoking a new series of exchanges between the US and Iran. For now, however, the ceasefire seems to have resumed. Shipping through the Strait has picked up a little since the ceasefire was agreed in mid June, but remains well below typical pre-conflict levels.