Food inflation will continue to rise in 2014
Food inflation is expected to reach 3.8% next year, according to Prestige Purchasing.
The procurement specialist predicts that food inflation will rise faster than the consumer price index (CPI) rate of inflation of 2.3%. The figure is stabilising compared to the rate in 2013, but is expected to rise again in 2015.
The predictions are based on rising food prices in the first half of this year as a result of supply issues impacted by inclement weather, which including floods and droughts in the same year.
Current high prices dictate a lower inflation figure next year, but unpredictable weather indicates that prices will still rise. The weather had the biggest impact on grain and grape harvests, which push up the price of alcohol as well as meat from grain-fed animals.
“It’s imperative that the foodservice industry takes steps to ensure that these costs are not simply passed on to consumers, but find ways to safeguard a quality dining experience,” said Prestige Purchasing chief executive David Read.
Macro factors affecting food inflation next year are:
- Climate change
- Population growth
- Production costs and commodity markets
- Water scarcity
- Food wastage
Winners and losers in food inflation:
- Beef – the horsemeat scandal of Q1 means that traceability remains an important issue. Coupled with rising production costs, beef prices will remain high.
- Mature Cheddar cheese – this has risen at an average of 13% YOY due to limited milk supply and is likely to continue
- Salmon – after years of rising prices costs are starting to stabilise
- Wine – prices have risen by 16% YOY and were affected by the October Budget. Harvests were better in 20o13 but are still affected by the poor crops of 2012, keeping prices higher in 2014
- Chicken – the cost of corn is expected to fall by up to 20% next year, which will mean chicken breasts will fall by 5% to 7%
- Soft drinks – coffee and tea prices will rise due to poor harvests, monsoons and political turmoil
Advice for chefs:
- Keep it simple and control stock costs
- Create confidence through provenance
- Offer flexibility with portion size
