Economics bulletin 25 March

Date : 24 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.

Chancellor unveils Spring Statement

The Chancellor has unveiled the Spring Statement, announcing a number of policies to counter the rising cost of living. These include:

  • A cut of 5p per litre to fuel duty from 23 March.
  • A rise in the threshold at which National Insurance Contributions begin to be paid from July 2022.
  • A pledge to cut income tax from 20p to 19p in the pound by the end of this parliament.

See here for the Spring Statement 2022: Business Support Factsheet

In its latest forecast , the Office for Budget Responsibility (OBR) has said that UK households face the largest fall in living standards since records began.

Rising inflation

UK inflation has reached its highest level in 30 years, recording 6.2% on the CPI measure and 8.2% on the old RPI measure. Price rises in ‘food and drink’ have accelerated dramatically, from -0.6% in August 2021 to 5.1% in February 2022.

Input prices for food producers have increased by 6.9% since August. It is expected these rises will continue to feed into retail prices. The OBR forecast that inflationary pressure will peak later in the year at 8.7%, averaging 7.4% over the year.

See IGD opinion on the latest inflation data.

P&O ferries supply disruption

P&O ferry services between GB and Northern Ireland (NI) remain closed. Currently ferry freight capacity between GB and NI is reduced to 50% of its normal level, increasing supply chain concerns.

P&O ferries are the only operator of the route into the Border Control Post (BCP) in Larne, impacting animal product exports from GB into Ireland. Currently, goods scheduled to be checked at the BCP in Larne are being transported from Belfast after the crossing.

Traders with tickets for P&O Ferries are advised to use other operators where available.

The Ukraine Crisis – supply implications

The Food and Drink Federation have called for the Government to ease supply chain pressures and support vulnerable households dealing with food price inflation.

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

See here for the impact Ukraine crisis will have on global grocery retailing (for Retail Analysis subscribers).

Free range egg labelling

Due to the UK’s largest ever outbreak of avian influenza, birds have been kept inside for more than 16 weeks. This means that eggs previously sold as free-range, now have to be labelled as “barn eggs”.

Eggs can be re-labelled as free-range once the birds are permitted to go outside again.

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