Economics bulletin 06 May

Date : 05 May 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 Ukraine crisis, the rising cost of living, labour shortages, COVID-19 and adapting to a new relationship with the EU.

Shopper confidence remains very low

The mood of shoppers is bleak and IGD’s latest Shopper Confidence Index remains very low at -22, with little changed compared to last month. 90% of shoppers expect food prices to rise in the next year with 46% expecting prices to get much more expensive.

The stabilisation in shopper confidence is expected to be short lived as energy price and tax rises begin to impact household budgets over the next few months.

ShopperVista subscribers can access the full report here.

Our latest Viewpoint report examines how IGD expects shoppers to cope with rising inflation

Inflation expectations increase

The Bank of England (BoE) now expects consumer price inflation to reach just over 10% in Q4 2022 (compared to a previous high forecast of 8%). This reflects higher energy prices following the rise in the Ofgem price cap in April and projected large increase in October.

As a response to inflationary pressure, the BoE have increased interest rates by a further 0.25% to 1%, the highest level since 2009. In its recent forecast, the Office for Budget Responsibility expects interest rates to reach 1.9% by mid-2023.

Northern Ireland protocol uncertainty

There continues to be uncertainty around the future of the Northern Ireland (NI) protocol. This follows the recent NI Assembly elections.

The Democratic Unionist Party (DUP) have indicated that they will refuse to join NI Executive unless issues with the NI Protocol have been resolved.

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Our round-up of the latest economic and political news, focused on FMCGs