Bulletin: Wages, volumes and Farm to Fork summit

Restoring volumes

The UK economy has experienced slow economic growth in recent years. UK GDP was 1.7% above its pre-pandemic level of Q4 2019. This compares with Eurozone GDP being 3.4% higher. The food and drink market has endured a sort of slow-motion recession, with real sales shrinking and volumes compressed over a long period.

In our latest Viewpoint report, Striving for growth, we look at the impact of slow economic growth on the food and consumer goods industry.

Download the Viewpoint report and 1-page executive summary.

Read our article to better understand why we believe that the food and drink recession is now ending.

Farm to fork summit

This week, alongside the Prime Minister and members from across the whole food supply chain, IGD attended the Farm to Fork Summit at Downing Street. The Prime Minister announced a package of support for UK agriculture including:

• A new Horticulture Resilience and Growth offer that will replace the retained EU Fruit and Vegetable scheme, doubling the support to £80m

• The first UK Food Security Index providing industry and government with the ability to track food security on an annual basis

• £15m will be invested into genetic improvement networks to support access to resilient crops

• A £72m injection into the Endemics Disease scheme to eradicate a range of diseases across livestock herds

IGD Viewpoint
The government’s focus on the food system is welcome, reflecting the value the food system has in powering the UK economy.

The package from this meeting is very focussed on specific sectors, but as made clear in our report, A System under pressure, building resilience will be challenging and will require a joined-up approach between government and industry.

Wage growth

The ONS has reported that the average UK wage increased by 5.7% year-on-year (seasonally adjusted, including bonuses). Inflation in March stood at 3.2%, so the “real” value of the average wage increased significantly.

IGD Viewpoint
The increase in real wages will be welcome news to many hard-pressed consumers. Many who have experienced increased mortgage payments or rents will be looking for the Bank of England to reduce interest rates as soon as possible.  However, the Bank will not lower rates until they are confident that inflation is under control. The key question is whether the latest data on wages makes a rate cut less likely in the short term.

Unemployment and inactivity

The latest data from the ONS reveals a slightly weaker labour market with slightly increased unemployment (4.3% from January to March). Inactivity is a growing concern (22.1%), especially among younger adults.

Read our article for more details.

Shopper confidence boost

IGD’s Shopper Confidence Index increased to 3 in April 2024 compared to -1 last December. ShopperVista subscribers can see more details here.

IGD Viewpoint
There remain significant differences in sentiment by income group. Many are still struggling financially, and this improving sentiment is not yet translating into a greater willingness to spend more on food and groceries.