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 rising cost of living, the Ukraine crisis, labour shortages, policy developments and adapting to a new relationship with the EU.
Food inflation falls
Year-on-year CPI inflation for food and drink declined by 0.7 percentage points to 18.3% in May, down from 19% in April.
The decline in May is in line with our latest forecasts, indicating that inflation has now peaked and will decline slowly over 2023. In December 2023 food inflation is predicted to be between 8% and 10%.
This is still extremely high, creating serious hardship for many UK households.
To understand more about our latest food inflation forecasts Download our new Viewpoint Special: Exploring what’s next for food inflation or read the Executive Summary.
Stubborn overall inflation
The UK’s overall CPI inflation remained flat at 8.7% in May 2023. “Core” inflation, excluding the most volatile items such as energy, food, alcohol and tobacco, rose by 7.1%, up from 6.8% in April. This is the highest rate for 30 years.
The latest figures now make clear that the UK economy has an inflation problem. Rising core inflation, alongside last week’s announcement on rising wages, indicate that inflation is unlikely to dissipate soon.
See our article here for our full analysis.
Interest rate rise
The Bank of England Monetary Policy Committee has voted to raise interest rates for the 13th consecutive time from 4.5% to 5%. Interest rates are now at their highest level since September 2008.
The Bank of England stated that there is likely to be “greater persistence in the inflation process”, due to the tightness of the labour market and continued demand resilience.
This creates a high risk that interest rates could trigger a recession in an already sluggish economy.
Register here to attend the next Viewpoint webinar to hear the views of the IGD Economics team on the forecasts for the economy, consumer sentiment and government policy.
HFSS delay
A further delay has been announced to planned restrictions on multibuy promotions in England on products high in fat, sugar and salt (HFSS), due to the ongoing cost of living crisis.
The restrictions, originally scheduled for October 2022, are now set to take effect in October 2025, the same time advertising restrictions on HFSS products are due to be introduced. Location restrictions on HFSS products came into force on 1st October 2022.
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Our round-up of the latest economic and political news, focused on FMCGs