Bulletin: Away from home food inflation forecasts

New food inflation forecasts

Our new Viewpoint report, How to respond to rising labour costs in 2025, includes our first Away from home food inflation forecast. The report also explores:

• The latest economic outlook amid global uncertainty

• How consumers are adapting to rising food costs

• How businesses are navigating labour cost challenges

• How technology can address labour cost pressures

• The government’s priorities, especially the food strategy

Register your interest in receiving your free copy of the next Viewpoint report due out 29 April.

Global growth takes a hit

The IMF has cut its forecast from 3.3% to 2.8% for 2025 “reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment.” It states that the US tariffs and countermeasures are “a major negative shock to growth”.

The US faces a major setback, with tariffs and countermeasures weighing heavily, pushing growth down to 1.8% from 2.7%.

In the UK, inflation driven by higher energy costs proves even more damaging than tariffs, pulling growth down to 1.1% from 1.6%. This is a dramatic shift—policy choices are shaping economies in ways not seen in decades.

IGD opinion

US tariff policy is impacting economic performance worldwide, and the UK is not exempt from this. However, only part of IMF’s forecast downgrade for the UK is attributed to this. The bulk of the downgrade is due to other factors and even a sudden reversal of US policy would not create a major boost to the UK forecast.

Higher borrowing

Government borrowing has overshot expectations—hitting £152bn in the year to March 2025, exceeding both last year’s levels and the planned £137bn.

IGD opinion

While some of this surge occurred under the previous administration, the current Chancellor faces mounting pressure amid fiscal challenges.

The Spring Statement focused on growth and stability, but calls for deeper action are intensifying. The upcoming Spending Review in summer and the Autumn Budget are expected to bring spending cuts and tax increases. Meanwhile, shopper confidence is faltering as concerns over future taxes grow.

Big decisions are ahead—how the government navigates these pressures will shape economic sentiment in the months to come.

UK-US trade deal update

The IMF held meetings in Washington this week for finance ministers from the G7 and G20.

The Chancellor is meeting with her US counterpart Scott Bessent to pursue trade talks. She has struck an optimistic note stating that a deal to reduce or eliminate US tariffs is possible.

However, she also stated that the UK will not compromise its other interests in order to get a deal. And stated that the government “would not be watering down (food) standards in the UK.”

IGD opinion

UK production and product standards currently act as a “non-tariff barrier” to trade with the US in some categories, including food.

Business minister Jonathan Reynolds has previously stated that the UK will not compromise its sanitary and phyto-sanitary standards.

Export roadshow

Export roadshows are taking place to help get more small businesses exporting and grow the economy. The events will bring together small firms, industry experts, trade bodies and government. Part of the modern Industrial Strategy, the roadshow aims to channel government support to growth-driving sectors, as part of the Plan for Change.