Bulletin: Trump, GDP and jittery financial markets

Jittery financial markets

The financial markets have raised concerns about the high levels of government borrowing announced in the Autumn budget. Yields for both long- and short-term UK gilts have risen, indicating that investors see these assets as increasingly risky and demand higher returns to justify holding them.

Read our latest article exploring uncertainty in the financial markets, strategic drivers and impacts on the food system.

New US President

Donald Trump will become the 47th president of the US on Monday 20 January. The financial markets have raised concerns regarding US policy under President Trump. He has promised aggressive tax cuts, possibly funded by borrowing.

IGD will be publishing its latest free Viewpoint report on Thursday 23 January which considers possible implications on what a second Trump presidency might mean for the food system.

The report also provides an up-to-date analysis of Christmas trading, the economy, consumer sentiment and government policy. This is all viewed through the lens of the food system.

Get notified when the report is live here.

Lower inflation

ONS data shows that year-on-year “all items” inflation in December 2024 was 2.5% by the CPI method, down from 2.6% in November. Inflation for the full year was 2.5% down from 7.3% in 2023.

For food and drink, inflation in December was 2.0%, no change from the previous month. Inflation for the full year of 2024 was 2.7%, down from 14.5% in 2023. Fruit and sugar / confectionery items led inflation in this market in December. This outcome was at the top-end of IGD expectations.

IGD opinion

Looking ahead, inflation forces continue to threaten households. The domestic Energy Price Cap for January to March was raised slightly, up 1% – and, with recent cold weather, households are likely to be using more energy as well.

Businesses in many markets will see costs rise because of regulation and taxes. The new National Living Wage (NLW) will be implemented from April, as will increases in employer National Insurance Contributions (NICs). Many businesses will also be affected by higher trade costs – weaker Sterling and fees at UK borders – and the arrival of Extended Producer Responsibility (EPR).

Food and drink businesses will be exposed to all of these, to some degree. IGD has recently issued a new food price inflation forecast, assuming a slight resurgence of inflation in this market over 2025. Food prices are expected to rise by between 2.4% and 4.9% in 2025.

GDP and retail sales

The ONS has reported that GDP has increased by 0.1% in November and has shown no growth for the three months to November 2024. Services output grew by 0.1% in November.

Retail sales are estimated to have fallen by 0.3% in December 2024, following a rise of 0.1% in November 2024. Food stores sales volumes declined by 1.9% in December 2024.

HFSS regulations in Wales

The Welsh government has confirmed its intention to bring the HFSS rules into force from spring 2026.

German cattle and pig imports

The government has announced an import ban of cattle, pigs and sheep from Germany to protect farmers, to prevent the spread of Foot and Mouth Disease.