UK shoppers stick with less frequent ‘big shop’

Grocery shopping habits changed at the start of the pandemic and consumers are continuing to make bigger, less frequent trips to the supermarket, according to a new report from Kantar.

The data, insights and consulting company says that in the past month UK households visited the supermarket 15.7 times on average. That’s a slight increase from the 15.3 trips in the same period in 2020, but consumers are still making 40 million fewer trips per month than they were in 2019. At this rate of change, it would take three years to get back to our old shopping patterns.

Online sales have also levelled out. For the second month in a row, online grocery sales accounted for 12.4% of the market and a fifth of households now consistently order groceries online each month.

The report also said that supermarket price inflation has reached its highest level for more than a year.

Grocery price inflation reached 2.1% in the four weeks to 31 October, the highest since August 2020 when retailers were still scaling back promotions to discourage stockpiling.

As prices rise in certain categories, Kantar expects people to continue to shop around to find the best deals. Already, households visit an average of 3.3 supermarkets per month in order to find the best value for money.

Consumers are also getting ready for Christmas early, Kantar found. Frozen poultry sales in October were up 27% on last year, while 4.7 million households bought mince pies and 1.6 million households bought a Christmas pudding — 400,000 more than last year.

Household incomes expected to remain below pre-pandemic levels for two years

UK households will remain worse off than before the pandemic for another two years, according to the Office for Budget Responsibility (OBR).

Charlie Bean, a former Bank of England deputy governor and board member of the OBR, told MPs that household disposable income would not return to 2019 levels until the second half of 2023.

Officials also expect the UK’s productivity growth to remain low.

“We do have a modest pickup in productivity growth [in our forecast]. But it’s not back up to anything like the pre-epidemic rates,” Bean said.

Forecasts issued by the OBR alongside last week’s Budget showed that household incomes would be weighed down by inflation over the next two years, before rising by just 1.3% a year on average by the middle of the decade, the Guardian reports.

The Institute for Fiscal Studies (IFS) took a similar view, saying that the outlook for wages remained weak and it expected inflation and higher taxes to negate many wage rises.

Competition law suspended after panic buying of fuel

The UK government is suspending competition law in the fuel industry to help tackle shortages.

It comes after days of long queues at petrol stations triggered by fears that a shortage of lorry drivers was disrupting fuel supplies.

As a temporary measure, companies will be permitted to share information and prioritise parts of the country most in need.

A joint statement from companies including Shell, BP and ExxonMobil stressed that pressures on supply were being caused by “temporary spikes in customer demand, not a national shortage of fuel”.

The Petrol Retailers Association, which represents nearly 5,500 independent outlets, warned on Monday that as many as two-thirds of its members are out of fuel, with the rest of them “partly dry and running out soon”, BBC News reported.

Brexit is “obviously a contributory factor” to the shortage of HGV drivers that is having an impact across the economy, according to the shadow chancellor.

“To deny that I think flies in the face of reality,” Rachel Reeves told Sky News.

“There are other problems as well, an ageing workforce, problems with the pandemic.

“But when you cut off a supply of labour which we did when we left the European Union then you are of course contributing and adding to problems.”

BCC warns of ‘hiring crisis’ as job vacancies hit record high

Businesses in the UK are facing an “acute crisis” in recruitment, the British Chambers of Commerce (BCC) has warned.

It comes as official figures showed that the number of vacancies over the summer rose above one million for the first time since records began in 2001.

There were an estimated 1.03 million job vacancies in June to August 2021, up from 764,000 in the previous three months.

And early figures for August suggest there were more than 1.1 million vacancies that month for the first time ever, the Office for National Statistics (ONS) said.

Figures also showed that employee numbers were back at pre-Covid levels in August, although over one million people were still on furlough.

Siren Thiru, head of economics at the BCC, said that the record vacancies highlight the “acute hiring crisis” faced by many firms in the UK.

“With Brexit and Covid driving a more deep-seated decline in labour supply, the end of furlough is unlikely to be a silver bullet to the ongoing shortages,” Thiru explained.

“These recruitment difficulties are likely to dampen the recovery by limiting firms’ ability to fulfil orders and meet customer demand.”

Support for circular economy could create thousands of jobs, says report

Transforming the UK’s approach to repair, reuse, recycling and remanufacture could create more than 450,000 jobs across the UK, according to a new report.

The Green Alliance found that a new approach to the ‘circular economy’ — where products and resources are kept in use at their highest value for as long as possible — could lead to more than 300,000 new jobs in remanufacturing and 30,000 in repair work within the next 15 years.

A third of the projected total jobs would be in lower skilled occupations where unemployment rates are currently higher, while positions in skilled trades and administrative and procurement roles would also benefit. This could help to replace jobs lost to automation and offshoring, the environmental think tank said.

Supported by investment in skills, infrastructure and innovation, the West Midlands and the North West would see significant growth in remanufacturing jobs, while recycling jobs could help challenge unemployment in Wales, alongside rental and leasing jobs in the South West and remanufacturing jobs in Yorkshire and the Humber, the report suggested. There could be opportunities for product designers in new remanufacturing departments in the North East, and for skilled repairers of machinery and electronics in the East Midlands.

The Green Alliance called for the government to bring in a series of new policies including an ambitious target to halve UK resource use by 2050; to increase consumer demand by zero rating VAT on repairs and refurbishment; and to support workers to move into the circular economy through retraining programmes and career coaching.

Greggs returns to profit and plans to create 500 jobs

Greggs has reported stronger than expected sales and says it plans to create 500 new retail jobs in the second half of the year.

The high street bakery chain made a pre-tax profit of £55.5m for the 26 weeks to 3 July, compared with a £65.2m loss a year earlier when trading was hit hard by Covid-19 restrictions.

It was also up on the 2019 first-half figure of £40.7m.

Sales for the half-year were in line with 2019 at £546.2m, compared with £300.6m in the first half of 2020.

Chief executive Roger Whiteside said that sales had been stronger than anticipated in recent months and exceeded pre-pandemic levels in the four weeks to 31 July. As a result, the company now expects full-year profit to be “slightly ahead” of previous forecasts.

Greggs had 2,115 shops at the start of July and plans 100 net openings this year, with ambitions to expand to at least 3,000 stores.

UK manufacturing maintains growth despite rising costs

Manufacturers in the UK saw another month of growth in July but are facing continued supply problems and price rises, new figures reveal.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) stood at 60.4 in July, reflecting the 14th consecutive month of rising output in the sector.

The index was down from 63.9 in June and the record high of 65.6 in May.

In July, companies benefited from increased new order intakes, rising client confidence and the re-opening of the economy. There was also a further increase in new export business, with improved demand from the US, the EU, China, Russia and the Middle East.

Challenges faced by UK manufacturers in July included shortages of raw materials and staff, logistic delays caused by stretched international supply chains, and price pressures due to demand outstripping supply.

“The recent surge in global manufacturing growth has led to another month of near-record supply chain delays, exacerbated by factories and their customers building up safety stocks,” said Rob Dobson, director at IHS Markit. “Some firms also noted that post-Brexit issues were still a constraint on efforts to rebuild sales and manage supply and distribution channels to the EU.”

Meanwhile, input costs rose at a near-record pace, leading to a near-record increase in manufacturers’ selling prices, Dobson added.

“Amid growing indications that many supply chain disruptions and raw material shortages are unlikely to be fully resolved until 2022, the outlook remains one of constrained growth combined with high inflation for the foreseeable future.”

Shops and pubs forced to close after staff ‘pinged’

Business groups have urged the UK government to allow fully vaccinated people not to self-isolate after being “pinged” by the NHS Covid app.

Shops, factories and pubs across the country have been forced to reduce their hours or temporarily close due to staff shortages caused by people being informed by NHS Test and Trace that they have come into contact with someone who has tested positive for Covid-19.

In the week to 7 July more than 500,000 people in England and Wales were “pinged” by the app, a rise of 46% on the previous week.

Grocery chain Iceland has had to shut some of its stores as 1,000 staff are self-isolating, and pub chain Greene King has closed 33 pubs for the same reason, BBC News reports.

Marks & Spencer has also seen a sharp rise in the number of workers being notified by the NHS app, and said it may have to reduce hours if there are shortages.

Meanwhile, Vauxhall has reduced daily shifts from three to two at its Luton plant because of the number of employees told to self-isolate, and Nissan and Rolls-Royce have warned that staff shortages could affect production.

From 16 August, people who have been fully vaccinated will not have to self-isolate if they are “pinged” by the NHS app. Instead, they will be advised to take PCR test as soon as possible.

Business representatives including the British Retail Consortium and the CBI have said that this change should be brought forward immediately.

“With restrictions being lifted and cases rapidly increasing, we urgently need a surefooted approach from government, creating confidence to secure the recovery,” said CBI president, Lord Karan Bilimoria.

“This starts by immediately ending the self-isolation period of 10 days for people who are double-jabbed and providing a route out of isolation for those not yet fully vaccinated through daily lateral flow tests. Against the backdrop of crippling staff shortages, speed is of the essence.”

Uber sees demand return to pre-pandemic levels

The number of Uber rides booked by UK users has bounced back to pre-pandemic levels, the ride-hailing provider said on Monday.

It comes after lockdown restrictions were eased and people started going out to bars and restaurants again.

During the week that many restrictions on hospitality were lifted, bookings matched or slightly exceeded those of the equivalent week two years ago.

Wider geographic coverage beyond big cities, as well as new forms of transport such as traditional taxis, also helped fuel the rebound.

Although demand has been highest in the evening, there has also been a rise in the number of trips during the morning commuting hours, Uber said.

With some people still wary of using public transport due to the pandemic, Uber is aiming to hire thousands more drivers.

“Following the swift rollout of vaccines in the UK, people are travelling on the Uber platform just as much as they were before the pandemic,” Ash Kebriti, Uber’s UK general manager, told City A.M.

“We are now looking to sign up 20,000 new drivers across the UK, as cities continue to recover.”

Consumers likely to play safe rather than spend, spend, spend

Half (51%) of people in the UK who have built up their savings during the pandemic intend to hang onto these funds, new research suggests.

The findings pose a challenge to the view that the UK economy will bounce back in 2021 due to a sudden release of pent-up consumer demand, says Ipsos MORI, which surveyed more than 3,000 people for Nationwide Building Society’s UK Consumer Insight Panel.

What’s more, this comes at a time of record-low interest rates, when there has never been less of an incentive to save.

Three quarters (74%) of those who took part in the survey said they want to save more than they have done in the past, as the pandemic has shown the world is full of risk and uncertainty. And eight in ten (79%) said they want to save enough money so they don’t need to worry about losing their job.

Looking at public values, the findings also reveal that hedonistic sentiment among the UK public has fallen to its lowest level for 22 years. Between 1999 and 2019, an increasingly large proportion of UK residents agreed with the idea that “The important thing is to enjoy life today, tomorrow will take care of itself”.

Two years later this progression has been reversed, with less than half (46%) of the public agreeing. For the first time since 1999, more disagree than agree with this statement.

“At this stage in the recovery, the data suggests that ‘The Great Unlock’ could be less like the roaring twenties, and more like the 1950s – with the nation adopting a type of post-war austerity,” Ipsos MORI concluded.