Sunday, June 16, 2024
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Inflationary pressures begin to bite harder

It shouldn’t be a surprise, given the headlines over the last nine months or so, that inflationary pressures are beginning to bite. Currently 9.4%, it’s stinging some to the point that they’re having to choose between “heating and eating”.

The last time inflation was this high was 1990, when it reached 9.5%. Before that we have to go futher back to 1979-1981 when inflation was 13.4%, 18% and 11.9% respectively. But even those eye watering rates weren’t a patch on the 36.5% recorded in 1800, 25.2% in 1917 and 24.2% in 1975.

As a result, UK retail sales are falling at a rate last seen at the start of the pandemic according to a survey from accounting giant  KPMG and the British Retail Consortium. The annual drop of 1% is the third monthly fall in a row. Households are feeling the pinch and having to make defined choices over how they spend.

Granted the Jubilee weekend gave food sales a shot in the arm, and fashion has been helped by the hot summer and weddings, but as the survey found, it’s not been enough.

But while consumer spending is falling, new data from Barclaycard indicated that household bills are mounting. In June, spending on utilities was up 40% and spending on petrol and diesel rose by about 25%. Spending on household goods fell 5.1% in June, compared with May and home improvements and furniture fell 7.4% and 2.7% respectively.

Very simply, consumers are having to make tough choices and, in some cases, are either cutting spending or switching to different brands as they seek out value.

Could this be a prelude to a recession? Only time will tell.

UKCA conformity simplified
And on the subject of consumer spending, those in the retail supply chain will be aware of the relatively new rules on product marking post-Brexit that demonstrate product conformity; CE marks were replaced by UKCA marks on 1 January 2021 with a provision to allow the old CE marks to be used until 1 January 2023 in many cases.

However, to ease the burden on firms, the government announced changes at the end of June to make it simpler to apply new product conformity markings for most products.

The new measures include reducing re-testing costs so that any conformity assessment activities undertaken by EU bodies before the end of 2022 means that UKCA marking can be used next year. Further, the need to re-test existing imported stock will be removed – so long as it was manufactured and imported into the UK by the end of 2022, goods will be deemed to have met UKCA requirements.

In another change, the government will continue to allow spares onto the UK market if they comply with the same requirements that were in place at the time the original products or systems were placed on the market.

And to make it less expensive and easier for businesses to continue to supply goods to the UK, current labelling rules will be extended to allow important information and UKCA markings to be added to products by applying a sticky label or an accompanying document.
There is still bureaucracy built into the product marking process but these changes will be welcomed by those that have to abide by the rules.


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