The Institute of Grocery Distribution (IGD) cautions that British food and drink prices are set to keep rising in 2024, contributing to an ongoing cost-of-living crisis. The IGD’s latest report estimates food and drink inflation between 0.3% and 2.3% by the end of the year. Despite a slowdown from its peak in March 2023, where it reached over 19%, food price inflation was still at 8% in December, impacting household finances significantly.
Persistent Cost-of-Living Crisis
The IGD report emphasizes that recent inflation figures underscore the persistent cost-of-living crisis for many consumers. Rising food prices continue to strain the finances of households, with a noticeable divide between mainstream society and those with lower incomes. This poses challenges for Prime Minister Rishi Sunak, who faces an electoral challenge and has hinted at a national election in the second half of the year.
Economic Impact and Household Finances
Household living standards have declined over the past two years due to high inflation, presenting a significant economic challenge. The overall inflation rate in the UK was 4.0% in December, and the Bank of England previously forecasted inflation to exceed 3% throughout 2024. The IGD’s warning signals potential difficulties for households and businesses as they navigate economic uncertainties.
Policy Changes for Food Businesses
The IGD report also highlights the importance for food businesses to stay informed about upcoming policy changes in 2024. This includes the introduction of new post-Brexit border checks for goods imported from the European Union, reflecting the ongoing impact of the UK’s departure from the EU. Additionally, a review of origin labeling for food and consumer goods adds another layer of consideration for the industry.
The report suggests that businesses in the food sector need to be agile and adaptable, responding to evolving economic conditions and regulatory changes to navigate the challenges ahead.
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Credit: James Davey