Economics bulletin 17 February

Date : 16 February 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 crisis, labour shortages, policy developments and adapting to a new relationship with the EU.

Food inflation falls slightly

Year-on-year CPI inflation for food and drink in January was +16.7%, down fractionally from +16.8% in December. This is the first fall in food inflation since May 2021 and is broadly in-line with IGD’s latest forecast. We predict that food inflation will begin to fade over 2023 but will remain above zero by the end of the year.

To read more of our predictions for what’s in-store for the economy, shoppers and government policy in 2023, download our latest Viewpoint Report: From inflation to recession: what to watch out for in 2023.

Overall inflation continues to fall

The UK’s overall CPI inflation continues to weaken, down to 10.1% in January 2023. Inflation has been declining since its peak in October at 11.1% and is expected to continue falling over 2023. The downward movement in inflation is primarily due to falling fuel prices.

For further insight, please see here.

Labour market cools

The UK labour market is beginning to show signs of cooling as the weak economic environment has an impact. Vacancies continue to fall, and the redundancy rate has increased slightly.

The number of those defined as economically inactive is falling. This downward movement is driven by the return of students to the workforce. In contrast, the number of over 50’s defined as economically inactive continues to rise.

Read our article here for in-depth analysis.

Real pay declines again

The growth rate in average weekly earnings in December 2022, including bonuses, fell slightly to 5.9% year-on-year. Average wages, after adjusting for the impact of inflation, continues to fall. Using the wider RPI measure of inflation, real wages are now down 7.8% year on year.

See here for more analysis.

Border Force strike

Border Force staff will take part in industrial action from 17th February until 7am on 20th February. Passengers and freight entering the UK through the ports of Calais, Dunkirk and Dover as well as via the Channel Tunnel will be impacted by expected disruption.

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