Bulletin: consumer caution and growth downgrade

Consumer caution

New IGD research reveals that families and individuals will continue to shop cautiously as factors such as debt and job insecurity affect spending habits in a time of slow growth.

• 36% of all adults plan to cut spend on food and grocery shopping over the next few months.

• 43% of adults plan to buy fewer items in their regular food shop over the next few months.

Understand more by downloading IGD’s free new Economics Viewpoint report: Striving for Growth, outlining the industry’s challenges to growth.

Download the Viewpoint report and 1-page executive summary here.

IGD Viewpoint

This more cautious approach makes it harder to convince consumers to increase their spend, particularly those on the lowest incomes. It will make it challenging for industry to drive growth again by recovering volumes, revenue or margins.

Growth downgrade

A new Economic Outlook report from the Organisation for Economic Co-operation and Development (OECD) suggests that the global economic outlook is improving somewhat, with inflation trending downwards.

However, projections suggest that growth in 2024 and 2025 will be led by emerging economies, especially India, Indonesia and China.

Economic performance in Europe will remain fairly weak by comparison. Projections for the UK specifically have been revised downward since the previous edition.

Analysis suggests that UK fiscal policy should remain prudent and warns against “policy churn”, presumably with the forthcoming election in mind.

Interest rate delay

The US Federal Reserve has decided to keep interest rates unchanged. This comes as consumer inflation increased by 3.5% over the 12 months to March.

IGD Viewpoint

US inflation remains stubbornly high at a time of relative stronger economic growth than other Western economies. The Bank of England will need to monitor interest rates in other economies when deciding whether to change UK interest rates when it next meets on 9 May 2024. Reducing interest rates too early may weaken Sterling and result in higher import prices.

Import changes

The next phase of the Target Operating Model impacting imports went live on 30 April 2024. This impacts medium and high-risk animal products, plants and seeds.

So far, there have been limited delays and disruption.

See here for our full analysis and Viewpoint.

Harvest warning

The Energy and Climate Intelligence Unit has released a report in which it “suggests a marked reduction in many key winter crops such as wheat and barley” due to the wet weather.

IGD Viewpoint

Climate change continues to present challenges to the UK food system.  Read our full analysis on how climate change is impacting the resilience of the UK food system.

Food supply chain inquiry

The UK’s leading supermarkets were represented this week at the Environment, Food and Rural Affairs Committee inquiry into Fairness in the Food Supply Chain. Topics included the impact of food price inflation and relationships of food producers, manufacturers and retailers.

View the session here.

Scotland First Minister

Humza Yousaf, Scotland’s First Minister, has announced that he will resign. He will continue in post until a successor has been elected.