‘Food, drink businesses facing tough climate of low economic growth’

Food and drink inflation will not turn negative until at least 2028, states a recent industry report, adding that living standards are expected to fall lower than pre-pandemic levels.

According to IGD’s latest Economics Viewpoint Report and a new food inflation forecast, food and drink inflation will sit between +0.3 per cent and +2.3 per cent at the end of 2024, compared to 8 per cent currently. It will level off at +1 per cent to +2 per cent by 2025, contributing to a cost-of-living crisis for some time.

IGD also pointed out that food businesses will also need to keep abreast of the slew of upcoming new policy changes.

It highlighted that ahead of the Spring Budget, there will be a full roll-out of the Target Operating Model, which will see processes at borders change and potentially slow down imports on the road. Other new policy activities include a review of origin labelling for food and consumer goods, an update on the interoperability of the deposit return scheme, and the government’s response to the independent review into labour shortages in the food supply chain.

James Walton, Chief Economist at IGD, said, “For the foreseeable future, UK output will remain flat, meaning that economic recovery from the pandemic is now in the past rather than the short to mid-term future.”

Michael Freedman, Head of Economic and consumer insight, added, “The recent inflation figures highlight that the cost-of-living crisis is still real for many consumers. There is a real divide between mainstream society and those on the lowest incomes. A one size fits all approach to meeting customer needs will not suffice in this market.”

Regardless of which government inherits the UK’s complex economic and policy landscape, IGD’s latest Viewpoint Report recommends that food businesses plan ahead to stay ahead of policy changes in a tough climate of low economic growth.