Economics bulletin 16 September

Date : 15 September 2022

Your overview of economic and policy news with a focus on the food and consumer goods industry. Featuring the latest developments and guidance on the rising cost of living, the Ukraine crisis, labour shortages, COVID-19 and adapting to a new relationship with the EU.

Food inflation continues to climb

Food price inflation increased to 13.1% in August from 12.7% last month, the highest level since 2008.  August 2022 was the 13th consecutive month of food price rises.

Food price inflation is running 2% behind IGD's forecasts at this point in the year, primarily because produce prices have risen less than expected.

For further insight, please see here.

Inflation pressures ease

The CPI inflation rate fell slightly to 9.9% in August from 10.1% last month impacted by declining petrol prices.

Independent analysts have predicted that the Energy Price Guarantee, capping typical household energy bills at £2,500 per year could reduce the peak of inflation by four percentage points in January 2023.

Real wages decline

Although wages continued to rise, up 5.5% in the 12 months to July 2022, price increases are outstripping wages, resulting in a decline in the value of pay with workers 6.5% worse off than a year ago. This is a record contraction in household incomes and is impacting shopper spending (see the latest IGD research).

For further insight please see here.

Labour market update

The unemployment rate for May to July 2022 declined to 3.6%, the lowest level since 1974. However, economic inactivity continues to increase driven by more people leaving the workforce to enter education or due to long term sickness.

There are signs that labour market pressures are easing slightly as vacancies declined for a third consecutive month to 1.26m.  The number of vacancies remain around 50% higher than pre -pandemic levels.

For further insight please see here.

GDP grows marginally

Economic activity grew by 0.2% in July, according to the ONS.  This is lower growth than independent analysts had predicted. GDP was flat in the three months to July compared with the previous three months.

GDP is likely to be impacted in September by the bank holiday for the Queen’s funeral and the period of national mourning.

Availability concerns ease a little

On-shelf availability concerns remain high, despite falling for three consecutive months (60% vs 68% in May’22). For further insight into which categories are most impacted by availability concerns, see here for full details of IGD’s latest consumer research.

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