Economics bulletin 10 June

Date : 09 June 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.

Food inflation forecasts

Next week, IGD will publish its latest Viewpoint Special: Exploring the outlook for food inflation. This report will reveal our new forecasts for food price inflation, what it means for the economy and how consumers will react.

Visit our Viewpoint Reports webpage to be the first to read the report once it is published.

Shopper confidence remains low

IGD’s latest Shopper Confidence Index remains low at -21, despite a marginal increase over the last two months. Food price rises are at the forefront of shoppers’ minds, with 93% expecting prices to be higher in the next year, a record high.

The Government’s support package, announced in late May, improved the financial confidence of the least affluent groups. It is likely that the squeezed middle will be some of the hardest hit households and IGD expects the financial confidence of this group to fall further over the coming months.

ShopperVista subscribers can access the full report here.

Fuel prices at record levels

Fuel prices have risen significantly over the past week, reaching record highs of over £1.80 a litre for unleaded petrol. Rising motoring costs add further financial pressure on households managing the cost of living crisis.

It has been reported that it is £20,000 more expensive to run a lorry than it was last year, primarily due to fuel prices. These increased costs are likely to be passed onto consumers in the form of higher prices.

Economic outlook worsens

UK economic growth is forecast to fall from 3.6% this year to 0% next year, according to the latest Global Economic Outlook from the Organisation for Economic Co-operation and Development (OECD). The UK is forecast to be the slowest growing economy in the G7 group of industrial nations. Sharp tightening of fiscal and monetary policy alongside dramatic falls in consumer confidence are key reasons behind the UK’s forecasted lower growth.

The war in Ukraine and its impact on key commodities including oil, gas and food has seen global growth slow sharply, with it expected to be 3% in 2022.

Retail sales falling

Total retail spending declined by 1.1% in May 2022 compared to the previous year as the cost of living crisis continues to impact household incomes. The latest BRC-KPMG retail sales monitor found that big-ticket items such as furniture and electronic goods have been the hardest hit. These results alongside poor shopper confidence exacerbate fears of a recession.

Food sales increased by 0.7% on a total basis, compared to May 2021 but decreased by 1.3% on a like-for-like basis. Inflation is supporting overall revenues amid falling volume sales.

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