Economics bulletin 03 November

Date : 02 November 2023

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, conflicts in Ukraine and the Middle East, labour shortages, policy developments and adapting to a new relationship with the EU.

Economy warning

The Bank of England has downgraded its economic growth forecasts for 2024 to 0% from 0.1% in August. High interest rates are having their desired effect; inflation is forecast to fall back to the 2% target by Q4 2025, however this is six months longer than previously forecast. Unemployment is forecast to rise to 4.7% by the end of next year (up from a forecast of 4.3% in Q4 2023).

The Monetary Policy Committee has voted to hold interest rates at 5.25%. Bank of England governor Andrew Bailey commented that “it is much too early to be thinking about rate cuts” and that inflation remained “too high”.

IGD Viewpoint: The economic impacts of events such as EU Exit, the Covid-19 pandemic, war in Ukraine and the subsequent inflation spike, are now - hopefully - fading. However full recovery still seems far off, and the UK’s structural challenges mean there is still significant danger that economic performance will flatline, rather than improve.

Register now for our next Viewpoint webinar on 16 November where we will discuss the economic outlook, changing consumer sentiment and the policy landscape ahead of 2024.

Shopper confidence stable

IGD's Shopper Confidence Index has remained steady at -9 in the last month. An increasing number of shoppers believe food prices will get cheaper in the next year (12% vs 3% October 2022). The vast majority (67%) believe they will get more expensive.

IGD Viewpoint:Consumer sentiment is, at best, less negative when compared with this time last year. It should be noted that confidence was particularly low last autumn due to the cost-of-living crisis and the instability and uncertainty caused by the mini budget.

However, there remains evidence of significant economic stress, particularly for those on the lowest incomes. It is likely to be some time before living standards recover to pre-crisis levels.

ShopperVista subscribers will be able to read the full Shopper Confidence Index report here.

Supply chain disruption

Strike action by vets and meat inspectors in Northern Ireland has disrupted food supply chains. Some meat plants have had to shut, whilst food products sent from Great Britain to Northern Ireland have been impacted.

In the latest consumer research conducted for IGD (23-24 October 2023), availability concerns are highest in Northern Ireland (73% compared to 52% overall).

For our full analysis, please see our Availability article.

HFSS Reformulation

HFSS legislation has pushed health higher up the agenda of food businesses and accelerated the pace of change, according to the latest report from IGD. The report explores the reformulation actions that food businesses have taken in response to the HFSS legislation, implemented a year ago.

Read the full report here.

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