Inflation slows but food industry faces ‘urgent challenges’ to growth and talent News

Although food inflation is slowing, UK food businesses still face the challenge of maintaining low prices while urgently driving volume growth.

This was the message from IGD’s new Economics Viewpoint report entitled Striving for Growth, which also highlighted an “urgent” talent shortage.

“Falling inflation creates a risk to businesses without price change,” the report stated. “Added to this is a profound shortage of digital, technical and engineering skills fueling the sector. This compels businesses and government to work together in raising the appeal of careers in food.”

Meanwhile, IGD’s latest Shopper data shows that families and individuals will continue to shop cautiously as factors such as debt and job insecurity affect spending habits in a time of slow growth.

James Walton, chief economist at IGD, said: “Although real-term wage growth is on an upward trajectory, partly due to the rise in the Minimum and Living Wage, the burden on household budgets is still considerable. And this is likely to drive more selective shopping choices, and greater competition among retailers.”

According to the Office for Budget Responsibility, average earnings growth will fall from a record seven percent in 2023 to 3.6 percent in 2024.

This will exceed inflation, so real earnings growth will continue. However, household debt will reach record levels in 2026, according to recent findings from the Trades Union Congress.

The landscape of job security is becoming more fragile, as redundancies are on the rise and the number of vacancies is falling.

Within this picture, the report reveals that 36 percent of all adults plan to cut spending on food and grocery shopping over the next few months.

The report also shows that 43 percent of adults plan to buy fewer items in their regular food shop over the next few months.

Despite the labor market being competitive in some sectors, the report acknowledges an urgent talent and skills shortage within the UK food and consumer goods sector. Within UK food and grocery, vacancies are markedly high, with an estimated 108,000 in foodservice currently.

In response to the 2023 Independent Review into Labor Shortages in the Food Supply Chain, IGD is supporting the Food and Drink Sector Council in leading a Workforce Steering Group to address the talent shortage and raise appeal for the spectrum of careers in UK food and grocery.

Part of this work will be a sector-wide campaign, rolled out this summer, mobilizing food businesses, government, and the careers and employment sector to champion the breadth and depth of opportunities for all across the industry.

IGD’s new Economics Viewpoint unpacks the need for food and consumer goods businesses to get ahead of the skills challenge and feed the talent pipeline for improved growth.