The FPI, developed in partnership by consultancy CGA Strategy and the foodservice procurement specialist Prestige Purchasing, is a sector-relevant alternative to the government’s Consumer Price Index (CPI).
Recent deflationary trends in the CPI didn't reflect what was happening in the foodservice sector, according to the organisations.
“The FPI has been developed as a more accurate and relevant alternative to the government’s CPI, which, up until now, has been the only inflationary index available to food purchasing professionals to measure success,” they said.
“The FPI has now revealed that the deflationary trends in recent CPI statistics are only partially reflected in the foodservice market.”
Data from the CPI was relevant for consumers and retailers, but didn’t reflect the prices on offer to caterers, said David Read, ceo of Prestige Purchasing.
‘Ill-informed manner’
“Buyers who rely on the CPI may be acting in an ill-informed manner when negotiating with suppliers,” he said.
“This is because the CPI is calculated using supermarkets’ selling prices instead of foodservice wholesale prices, and we now know that these market movements are distinctly different.”
Following two years’ of data analysis comparing pricing from wholesalers with information from the CPI, there was a clear difference in trends between the two sectors, claimed ceo of CGA Phil Tate.
Many of the differences were due to the on-going supermarket price wars, which had caused the price of retail food and drink to plummet, but did not represent what was happening in foodservice, he added.
The increase in discounter, convenience and online grocery shopping were driving the price wars.
“This is creating a major drag on prices, which is not the situation in the foodservice wholesale market,” said Tate.
‘Relevant toolbox’
“When we spoke to Prestige Purchasing about this, we were excited about working together to create a more accurate and relevant toolbox for the foodservice world.”
Data for the FPI will be based on the price of a basket of goods from wholesalers, rather than retailers.
The goods will include: hot beverages, bread, cereal, fish, food products, fruit, meat, milk, cheese, eggs, oils and fats, soft drinks, sugar, jam, syrups, chocolate, confectionery and vegetables.
Price fluctuations across each of the above categories will also be shown, as well as price fluctuations for a whole basket.
Meanwhile, the strain of increased competition in the eating out sector had forced many high street pubs to slash the prices of their dishes, a recent Horizons’ Menu Trends report showed.
On average, the price of an adult’s three-course meal in a pub had declined by 45p to £18.74 in the summer, compared with £19.19 for the same period last year.