Foodservice price inflation ‘particularly unwelcome for pubs’ says CGA

The CGA Prestige Foodservice Price Index showed a continuation of the upswing in wholesale foodservice prices, following year-on-year increases of 1.8% in December and 2.9% in January.

The report points out that it further widens the gap between inflation in the sector and inflation experienced by the public, as measured by the Consumer Price Index. Month-on-month inflation from January to February was 0.6%, higher than seasonal averages.

“Against a stormy backdrop of challenges with business rates and increasing wage costs, the latest figures from the CGA Prestige Foodservice Price Index will be particularly unwelcome in the pub sector, where hard-working publicans are seemingly being hit with rising costs at every turn,” said Christopher Clare, head of consulting and insight.

Sugar, chocolate and other confectionery​

Of the 10 sub-categories measured by Prestige Purchasing and CGA Strategy, nine saw higher prices year-on-year. Areas that have experienced particularly high inflation include fish, with prices up more than 8% on February 2016. Sugar, chocolate and other confectionery have also seen prices noticeably higher as supply of cane sugar into the UK has reduced. Volatility in sugar has also led to an increase in soft drinks prices of more than 6%. In addition vegetables have seen prices rise significantly as poor weather conditions have hampered production in key European regions.

With the exchange rate for sterling likely to remain low, the Foodservice Price Index forecasts more increases in inflation between now and late summer, with rates well above seasonal averages. However, there are indications pressures may ease a little towards the end of 2017, with the recent fall in oil price a welcome development.

No respite in inflationary trends​

Clare continued: “Inflationary pressure looks set to continue, with our Foodservice Price Index forward forecasts showing we might hit 5% in the next couple of months. We are in for a continued period of volatile pricing and operators will find their supply chain is demanding extra focus and that good data is key.”

CGA Strategy chief executive Phil Tate added: “Our latest Foodservice Price Index reveals no respite in inflationary trends. The moderate-to-steep rises in nearly all categories are placing unwelcome pressure on businesses in the foodservice supply chain, and with sterling continuing to struggle there is little to suggest inflation will ease soon. It reinforces the need for operators to adopt sharp purchasing strategies in the months ahead.”