May 29, 2017


Slower consumer spending in EU to impact pork industry


A forecast slowdown in consumer spending in important pork-consuming EU state members Germany, Spain, France and Italy is an issue of concern for the pig meat industry, AHDB Pork said.


It said that the slowdown could feed into the already declining consumer demand for pork within the EU, perhaps encouraging a reduction in purchases or a switch to cheaper poultry meat.


The European Commission (EC) has released its latest economic forecast (Spring 2017), which predicts the likely shape of the EU and member state economies through to 2018.


Although it says that the European economy has entered its fifth year of recovery, inflation has risen significantly in recent months in the EU, mainly due to oil price increases. Any increase in inflation, especially when it exceeds wage rate growth, negatively impacts consumer demand.


Consumer spending, the main driver of EU GDP growth, is set to moderate this year as inflation partly erodes gains in the purchasing power of households. "As inflation bites, consumers have less disposable income and can be expected to cut back expenditure on all goods and services, including food purchases. However, this does follow from the fastest rate of consumer spending expansion in 10 years during 2016", the pork division of the UK Agriculture & Horticulture Development Board said.


Inflation is forecast to ease only by 2018 when consumer spending is anticipated to pick up slightly across the EU. However, according to AHDB Pork, the outlook for key pork-consuming countries remains mixed. Forecast improvements to German, Italian and French consumer spending are contrasted with some slowing from Spain and the Netherlands.