Foodservice price inflation eases for September

30-Oct-2017 - Last updated on 30-Oct-2017 at 12:41 GMT

Positive sign: domestic production has improved meaning inflation for vegetables has eased

Wholesale foodservice price inflation fell to 6.5% in September, down from a record high in August of 9.3%, according to new figures.

The figure is the lowest recorded by the CGA Prestige Foodservice Price Index since April, though it remains well above historic levels and consumer-side inflation as measured by the Office for National Statistics.

The drop is a sign that inflation, which has been rampant during 2017 according to the index, might now be beginning to ease though many categories of the market continue to experience volatility in prices.

Double figures

Inflation was at double figures in categories, including oils and fats – because of challenging olive and sunflower oil supplies – and mineral waters, soft drinks and juices – thanks to high fruit juice prices and transportation costs.

However, in these and several other categories, the index forecasted a steadying of supply and costs, which should reduce inflation levels in the months ahead.

Inflation is showing signs of easing in categories such as vegetables, where domestic production has improved and sugar, where the removal of quotas has ramped up supply and led to year-on-year deflation of 7.6% in September.

However, fears of a post-Brexit shortage of migrant labour may dent confidence in categories that are heavily dependent on domestic supply.

Substantial challenges

CGA commercial director Graeme Loudon said: “The foodservice sector’s year has been characterised by historically high levels of price inflation, triggering substantial challenges for operators throughout the supply chain.

“The latest index reveals some grounds for hope that inflation levels may now start to ease a little and that would provide the sector with some very welcome stability.

“But with economic factors, supply issues and Brexit all contributing to price volatility, any optimism about a long-term easing of inflation must be tempered with a high degree of caution.”

Prestige Purchasing head of consulting and insight Christopher Clare said: “The easing in overall inflation means a respite for many businesses where commercial pressures have been rising – not just in input prices but also through the impact of business rates and slowing sales as consumers tighten their purses in the tougher economic conditions.

“While food prices are not yet falling, we are optimistic that we have seen the bulk of any broad increases coming through.”