Economics bulletin 11 March

Date : 10 March 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.

The Ukraine crisis - inflationary impact

The Ukraine crisis is expected to have broad impacts on supply chains and result in significant food inflation. Wheat prices continue to reach record highs, up nearly 40% year on year in early March. Pricing for barley, rapeseed, and maize are also increasing.

For more information, please watch our latest video on the crisis and its impacts.

The UK government has expanded its Export Support Service to cover questions related to the Ukraine crisis. See here for further details.

Volatile energy prices

The price of Brent Crude oil declined after the United Arab Emirates indicated that it supported increasing production. This follows significant increases recently due to the conflict in Ukraine and announcements by the UK government and EU that they would be reducing their reliance on Russian oil and gas imports in 2022.

See here for the impact inflation will have on UK grocery retailing (for ShopperVista subscribers).

Falling living standards

The Resolution Foundation has warned that the average UK household is likely to experience a £1,000 decline in real income over 2022, putting significant pressure on living standards.

The Centre for Economic and Business Research estimates that inflation will now exceed 8.3% in April 2022, remaining at over 7% into early 2023. This persistent inflation effect is a key difference compared to Bank of England’s estimate last month.

Food strategy white paper delay

The government has announced that it is postponing publication of the food strategy white paper until after the pre-election period for the local elections. The elections are due to take place on 5 May 2022.

Delay to Extended Producer Responsibility

It has been reported that the government is delaying its planned introduction of Extended Producer Responsibility (EPR) for packaging.

EPR will mean that packaging producers will pay the full cost of managing packaging once it becomes waste.

EU imports call for evidence

The EU Commission has issued a Call for Evidence around applying EU health and environmental standards to products imported into the EU. If implemented, these changes would apply to goods exported from the UK to the EU.

Availability concerns decline

IGD continues to monitor any impact on product availability, resulting from supply chain challenges including labour shortages and changes to border controls. In the latest shopper research conducted for IGD last weekend (4-6 March 2022), fewer adults are reporting availability issues (56% compared to 66% a month ago). Availability issues remain highest for savoury snacks and fresh produce.

Fewer adults have recently felt the need to stock up or purchase more than they normally do (33% vs 41% two weeks ago). There has also been a fall in the numbers saying they will or might stock up (35% vs 44%).

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