Bulletin: Inflation forecasts and 2024 predictions
25 January 2024Featuring food inflation forecasts, 2024 predictions, the Target Operating Model and debt.
Food inflation to remain higher
Food price inflation fell to 8% in December, in line with IGD’s previous expectations.
Our new forecasts released yesterday are slightly more pessimistic than previously predicted. Food inflation is expected to average between 1.9% to 3.9% over 2024.
Download our new Viewpoint report: As food inflation falls, what’s in store for 2024? to see our new forecasts, the key drivers for inflation and how food inflation will impact consumers and businesses.
2024 predictions
2024 is set to be a critical year for the food and consumer goods industry. Many businesses will look for margin recovery. However, this comes at a time when businesses are faced with numerous challenges.
Outlined below are five of our predictions for 2024 for the economy, consumer sentiment and government policy.
UK economic growth is expected to stall in the years ahead
The geo-political situation has the potential to disrupt global supply chains in 2024
Living standards in 2024/25 are forecast to be lower than the pre-pandemic level
Many consumers will prioritise using any extra income to pay back debt
The general election will dominate the political landscape, slowing policy progress for the food and consumer goods industry
See all our predictions in our latest Viewpoint report.
Target operating model
The next phase of the Border Target Operating Model (BTOM) will be implemented from 31 January 2024, with implications for businesses that import food, drink and other goods to the UK.
IGD Viewpoint: It is not certain that all parties will be ready. The status of the UK’s key trading partners, especially SMEs, is very difficult to determine.
IGD has identified three key areas of uncertainty:
The ability of businesses to provide pre-notification of incoming shipments on the Short Straits and Irish Sea routes
The availability of vets to sign off Export Health Certificates for animals and animal products heading to the UK
Business willingness to engage with the new system in order to trade with the UK
Read our full analysis of the Target Operating Model.
Availability concerns decline
In the latest consumer research conducted for IGD (10-11 January 2024), fewer than half of adults (47%) experienced shortages of some food and groceries in-store or online recently. Availability concerns are at the lowest level since we started measuring this in July 2021.
Availability concerns continue to be highest in Northern Ireland.
To read our full analysis see our availability article.
Government borrowing falls
UK Government public sector borrowing for the month of December was around half of December 2022, at £7.8billion. This is the lowest level of government borrowing in December since 2019.
Lower than expected government borrowing may allow the Chancellor to announce some tax cuts in the Budget on 6th March. However, a new report from the IFS has warned that “it will be more difficult to reduce the debt-to-GDP ratio over the next parliament than in any other parliament since the 1950s.”