Economics bulletin 08 July

Date : 08 July 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.

Government changes – impact on policy

Following the resignation of the Prime Minister and changes in the cabinet, an election for a new leader of the Conservative Party is expected to take place over the summer.

The developments may delay planned policy announcements, including the Health Disparities white paper.

Economic woes worsen (fast)

In our upcoming Viewpoint webinar at 11 a.m. on Thursday 21 July, we will explore the outlook for the UK economy, whether a recession is likely over 2022, and how consumers will manage the cost of living crisis.

Register your place here.

Shopper confidence at all-time low

IGD’s Shopper Confidence Index hit its lowest level in June, falling three points to -24. Financial confidence declined further as shoppers increasingly prioritise saving money over quality.

ShopperVista subscribers can access the full report here.

Economic conditions deteriorate

The Bank of England has warned that the UK economic outlook has deteriorated materially over the last few months, primarily due to the Russian invasion of Ukraine. They predict that higher inflation, rising interest rates and poor economic growth will increase pressure on households and businesses.

For further insight please see here.

The Office for Budget Responsibility has also reported emerging risks to the public finances which are “already on an unsustainable path in the long term”. See here for further details.

Inflation concerns mount

New forecasts from National Energy Action suggest household energy bills will rise from £1,971 to over £3,000 in October. This may drive inflation above the Bank of England’s current forecast, that inflation may peak at over 11% in the autumn.

In addition, The Food and Drink Federation has warned food prices “could well rise some way above 10%” and that the peak for price rises may come in 2023.

As reported last month, IGD expects food price inflation to peak at 15% in late summer averaging 10.9% over 2022. To read the full report, please see here.

Rise in National insurance threshold

The Government has raised the threshold at which National Insurance is paid from £9,880 a year to £12,750 a year. It is estimated that more than two million low income workers will no longer pay National Insurance.

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