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Between the lines Week 25 - June 2022

Date: 23 June 2022

Household holiday budgets bounce back, but trail pre-pandemic levels

According to Europ Assistance’s 2022 Holiday Barometer, average holiday budgets are significantly up on last year but still some way below pre-pandemic levels. Within this, the average European plans to spend £1,550* on a summer holiday this year while the average American has budgeted to spend £2,251* .

Graph showing how holiday budgets have rebounded in 2022

UK food price inflation hits 8.3% in June

According to the latest data from the leading market researcher, Kantar, UK food price inflation hit 8.3% in the four weeks to 12 June, with butter, milk and dog food prices rising fastest. The company now predicts that current trends will see the average annual UK grocery bill rise by £380 this year.

The highest level of UK food-price inflation for 13 years has seen droves of hard-hit UK shoppers abandoning their big-brand loyalties and opting for cheaper supermarket ‘own-label’ and value ranges. According to Kantar, branded goods sales fell 1% over the month while own-label product sales rose 2.9%. Within this, sales of value ranges like Asda’s Smart Price, Co-op Honest Value and Sainsbury’s Imperfectly Tasty, grew by 12%.

The numbers also suggest that shoppers are returning to pre-pandemic habits with ‘footfall’ jumping 3.4% while online sales fell some 9%, to their lowest level in over two years, possibly as consumers look to avoid delivery charges.

German economy set to run out of gas

On Tuesday (21 Jun) Germany’s BDI industry association slashed its forecast for German economic growth in 2022 from 3.5% to 1.5%, stressing that any further disruption to Russian gas supplies would make a German recession inevitable.

Previously, the EU relied on Russia for 40% of its gas supply. For Germany, the figure was 55% but, currently, Germany’s vital Nord Stream 1 pipeline under the Baltic, is down to just 40% capacity.

Meanwhile global gas prices have sky-rocketed over the last year; Europe’s benchmark gas price was trading at around €123 (per megawatt/hour) on Tuesday, a rise of over 300% on a year ago after it peaked at €335 euros earlier this year.

In common with Denmark, Austria, the Netherlands and Italy, Germany has now activated the first stage of its three-stage plan to cope with a gas-supply crisis. In Germany’s case, this entails a new auction system to encourage reduced gas consumption from manufacturers. Meanwhile, other states have reversed plans to shut down coal-powered plants.

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Between the lines week 25

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