Bulletin: Flat spending limits growth outlook

Household spending remains constrained  

Real household spending remains below pre-Covid levels, extending a long period of weak growth. New ONS Family Spending data shows how constrained consumer capacity continues to shape spending patterns across income groups.

Food and non-alcoholic drink accounted for around 11% of weekly spend, rising to 15% for the lowest income households and falling to 8% for the highest. This share has been stable over time, apart from a temporary increase during Covid. Spending on eating out averaged around 5% and varied less by income, at around 5% for lower income households and 6% for higher income groups. 

IGD Opinion 

Real household spending has been flat in real terms for decades, reflecting deep structural weakness. This helps explain the sustained growth of discount models across food and other sectors, with value likely to remain central to consumer behaviour. 

CBI growth outlook weakens 

The Confederation of British Industry (CBI) has downgraded its UK growth forecast for 2026 to 1.1%, from 1.3% previously. While the revision is modest in isolation, both figures point to a weak growth environment, underlining the ongoing fragility facing UK businesses. 

The CBI highlights persistent headwinds across sectors, including inflationary pressures, subdued demand, and high operating costs. 

IGD opinion 

For food and grocery businesses, IGD’s recent stakeholder interviews reinforce that energy, and transport costs remain among the most acute and universal challenges. 

This alignment suggests that current policy settings are yet to fully alleviate cost pressures. Greater focus on structural cost drivers, particularly energy and logistics, may represent one of the most effective areas for policy action to unlock growth across the food system. 

Retailers urge action on youth unemployment 

Retailers have urged government to act on youth unemployment, with the British Retail Consortium warning the prime minister that rising inactivity risks weakening future workforce pipelines. Key asks include: 

• expanding targeted support for young people not in work or training 

• strengthening careers guidance and employer engagement 

• improving access to flexible work experience 

With over one million young people NEET, the sector is calling for scalable solutions. IGD’s relaunched Feeding Britain’s Future programme provides one model, linking businesses with schools to deliver flexible, high-quality work experience and help build future talent. 

See our latest article IGD relaunches Feeding Britain’s Future, invites businesses to help next generation. 

 If you’re interested in joining our movement, please email [email protected] or visit the Feeding Britain’s Future page. 

Healthy food affordability worsens sharply 

The Food Foundation’s Broken Plate report shows the UK’s food system is moving in the wrong direction, with low-income families with children needing to spend 85% of disposable income on a healthy diet, up sharply in recent years. The findings underline widening inequalities, with healthier food becoming increasingly unaffordable for more deprived communities. 

IGD opinion 

This reinforces the urgency of action. Our work on Eatwell economics and the obesity crisis highlights the growing health gap between communities, based on their level of deprivation, and the need for coordinated action across industry. Businesses have a critical role to play in improving access to healthier foods, for example through reformulation. 

HFSS consultation deadline approaching fast 

The consultation on applying NPM 2018 to existing HFSS legislation closes on 17th June. Read a summary of IGD's recent webinar on the key proposed changes, the categories most likely to be affected and what they could mean for businesses across the food system. 

See our latest article: New UK food rules: time to have your say on HFSS.