Economics bulletin 29 September

Date : 29 September 2023

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 conflict, labour shortages, policy developments and adapting to a new relationship with the EU.

Availability issues

In the latest consumer research conducted for IGD (27-28 September 2023), approaching six in ten adults (58%) experienced shortages of some food and groceries in-store or online recently. This has remained stable since last month (58%). Availability concerns remain higher than when they were first measured in July 2021 (50%).

Availability concerns remain at the highest level in fresh produce (24%) and dairy (22%), although both categories have seen a slight decline since this was previously measured last month.

IGD Viewpoint: Consumers have experienced a long period of high food inflation and weaker than expected availability. These symptoms are remaining persistent, as the system weaknesses which helped create them remain in place. Persistent availability concerns indicate a faltering supply chain.

Download a free copy here of our latest Viewpoint Special report: Rebuilding resilience in the UK food supply chain to understand the key issues impacting the food supply chain.

Recession risk rises further

A recession is looking ‘increasingly likely in the UK’, with economic activity predicted to fall at a quarterly rate of 0.4% according to the latest UK’s Purchasing Managers Index, a leading indicator on the health of the economy.

The survey also signalled the largest fall in employment since 2009, excluding the pandemic lockdown months, indicating that wage growth may slow going forward.

IGD Viewpoint: The Bank of England received this index in advance of the Monetary Policy Committee meeting last week and it is likely to have contributed to the decision to hold interest rates at 5.25%.

This indicates that economic growth will remain very weak over the short-to-medium term. Register here for our next free Viewpoint webinar to hear our views on the economy, consumers and government policy.

Sick days increase

The Chartered Institute for Personnel and Development have reported that UK workers are taking more days off for illness than before the pandemic, with days off due to illness at their highest level in over a decade. Average rate of employee absence has increased to 7.8 days per employee a year, up from 5.8 days in the pre-pandemic period.

Minor illness was the reason for the majority of short term absences, whilst a third of organisations reported that Covid-19 was a significant cause of sick days.

IGD Viewpoint: It has been estimated that the UK food sector is experiencing a labour shortage of 500,00 people to meet necessary demands of business. Increasing rates of absence due to sickness further limit the capacity of businesses to operate at their full potential.

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