Bulletin: HFSS, wage problem, fewer vacancies

Wage growth slows

The ONS has reported that pay growth continues to slow. It is now rising at its slowest rate in two years. The average UK wage increased by 3.9% year-on-year (seasonally adjusted, including bonuses) for May to July 2024. Wage growth in real terms, taking account of declining inflation, was 2.2% for regular pay and 1.1% for total pay.

See our latest article on the wage problem and what this means for the food industry.

IGD opinion

If this slowing trend in wage growth continues, we should expect impacts for shoppers and the businesses that serve them. Consumer confidence may waver, and demand may dip, threatening the developing economic recovery.

On a positive note, the continued slowdown in wage growth makes it more likely that the Bank of England Monetary Policy Committee will cut interest rates again.

HFSS advertising restrictions

The government has confirmed that restrictions on advertising of products high in fat, sugar and salt (HFSS) will come into force on 1 October 2025. This will include:

• A 9pm watershed for advertising of HFSS products on TV

• Restriction on paid-for HFSS advertising online at all times
  

The government is launching a targeted consultation on how the restrictions will apply to internet protocol television (IPTV) services which deliver TV live over the internet. For more information read the consultation document which is open until 10 October 2024.

Debt warning

The Office for Budget Responsibility has warned that over the next 50 years, public sector net debt is projected to almost triple as a share of GDP from 94 per cent in 2028-29 to 274 per cent by 2073-74. In its Fiscal risks and sustainability report, it states that limiting the rise in global temperatures, improving the health of the population and boosting productivity could alleviate this increased debt-to-GDP ratio.

IGD opinion

This report paints quite a stark picture for the health of the UK economy over the next 50 years.

It does not come as a surprise, however – the new Chancellor has been warning of stresses in public finances for some months and previous versions of this reports have told a similar story.

Recent strategic shocks – especially Covid have made the sovereign debt problem more daunting and more urgent, but have not really changed the story materially. As shown in the report, achieving improvements in public sector productivity could be helpful and Health Secretary, Wes Streeting made comments to this effect this week.

As the largest private sector employer, the food system has a key role to play in achieving ambitious Net Zero commitment, helping consumers have healthier diets and overcoming productivity challenges.

Find out more about the work we are doing in sustainability,  health and our report on Productivity gaps in the UK food supply chain.

Unemployment and vacancies

The latest data from the ONS shows unemployment at 4.1% for May to July 2024. Vacancies decreased for the 26th consecutive period to 857,000 (a decline of 4.7% on the previous quarter). The total estimated number of vacancies remains 61,000 (7.7%) above its January to March 2020 pre-coronavirus (COVID-19) pandemic level.

GDP stalls

The ONS has reported that GDP has shown no growth in July and has increased by 0.5% for the three months to July 2024. This is the second month running of no growth. Services output was the main contributor with growth of 0.6% for the quarter.

Retail sales volumes are estimated to have risen by 0.5% in July 2024, following a fall of 0.9% in June 2024.

IGD opinion

Economic growth has been starting to pick up, however, these latest results show that the economy is in transition. The new government has emphasised the importance of generating higher growth. We should hear more in the Budget on 30 October, on the key measures to achieve this.

For the food industry, volume weakness will remain a key challenge. We predict that market volumes will recover slowly as the government struggles to turn the economy around quickly.

Avian flu

New mandatory bird registration comes into effect on 1 October to better protect the poultry sector from future avian flu outbreaks.