Economics bulletin 17 November

Date : 16 November 2023

Your overview of economic and policy news with a focus on the food and consumer goods industry. This week’s bulletin focuses on inflation, food price inflation, food industry value, wages, unemployment and changes at Defra.

Inflation declines sharply

The ONS has reported that “all items” CPI inflation has fallen sharply from +6.7% year-on-year in September to +4.6% in October, the lowest rate for about two years.

Inflation for “core items” (e.g. clothing, household durables) and, in particular, consumer services (e.g. eating out) remains quite persistent however, the latter being strongly influenced by rising labour costs.

Download our new Viewpoint report – Powering the everyday economy – the role of the food system. This report recognises the crucial role the food system plays in economic recovery and provides our quarterly summary of the economic landscape, the outlook for inflation, consumer sentiment and government policy.

Food inflation also down

Food price inflation declined to 10.1% in October, slightly below IGD expectations, raising the possibility that rates at year-end might undershoot the forecast – IGD welcomes this.

Most food categories saw weaker than expected inflation, possibly due to price reductions for some commodities, although inflation for beverages was higher than expected.

IGD Viewpoint: This sharp reduction in inflation will be welcomed by hard-pressed shoppers, although prices are still rising unusually fast. Hopefully, this improvement will soon be reflected in stronger consumer confidence and less concern over food prices. IGD’s ShopperVista service will pick up on this if it happens.

Weakening inflation also reduces the likelihood of further interest rate rises, although the Bank of England has emphasised that major rate cuts cannot be expected for some time – they intend to wait until they are quite certain that inflation pressure has eased.

Read our full analysis.

Food industry value

Download the new one page infographic to see the value of the food system.

Only when we recognise the whole food system, from farm to fork can we appreciate how critical it is to a thriving UK, in an ever challenging global landscape.

With a presence in every community across the breadth of the country the food system is central to every one of our local economies.

The food system will need to work together, like never before, to resolve some of our biggest national challenges, including delivering net zero and tackling the obesity epidemic.

Wages rising

The ONS has reported that average pay is growing ahead of inflation. Average total pay in September was up 8.3% year-on-year, with strong gains for both public and private sector workers.

IGD Viewpoint: It will take some time to compensate for losses to real pay that workers have suffered in recent years, even in a “best-case” scenario.

In the meantime, accommodating high wage growth will be a challenge for many employers, especially in labour-intensive service businesses.

Read our full analysis.

Unemployment rising

The rate of unemployment is edging up and now stands at 4.3%, versus 3.8% at the start of the year. The number of unfilled vacancies fell from 981,000 in August to 957,000 in September.

IGD Viewpoint: In view of the turmoil the economy has endured, it might be said that labour demand is actually surprisingly robust, which is good news for workers. The food and grocery industry in particular remains in great need of workers at every stage in the supply chain and in all types of roles.

Read our full analysis.

Defra change

The Prime Minister has announced that Steve Barclay MP has become the new Secretary of State for Environment, Food and Rural Affairs. Victoria Atkins MP is the new Secretary of State for Health and Social Care.

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