Foodservice prices rose again in December
This rise marks an increase in the rate of foodservice price inflation from November, when it stood at 3.4% - the lowest point since the start of 2017.
It also means inflation in the sector is once more above the wider level of UK inflation recorded by the Consumer Price Index.
The latest CGA Prestige Foodservice Price Index also showed inflation running high in most of its 10 food and beverage categories.
In fish, rising demand, the strengthening of the Norwegian Krone and uncertainty over the UK’s future fishing quotas are all contributing to substantial inflation.
Demand and effect
Increasing global demand and the effect of the La Niña weather phenomenon – the direct opposite of El Niño, when sea surface temperatures in the central Pacific Ocean drop to lower than normal levels – are driving up prices in the oils and fats category, while avian influenza is triggering uncertainty about the supply of poultry.
The index stated there were doubts about stability in other categories too. Pressure on UK meat supply has been exacerbated by the recent Russell Hume controversy, while pricing in the soft-drinks sector is experiencing turbulence ahead of the introduction of the ‘sugar tax’ in April.
Combined with Brexit-related pressures, including uncertainty over the outcome of negotiations and the future of migrant labour in domestic sectors like fruit and vegetables, relief from inflation is unlikely in the immediate future.
Prestige Purchasing head of consulting and insight Christopher Clare outlined predicted future inflation levels will be a mixed bag.
He said: “While we have seen more reaction from the markets this past month as the Government began to clarify its position and desired direction for Brexit, it did not prevent the continuing correction from the price peaks that followed the referendum."
Substantial pricing pressure
He added: “Some further falls can be expected but these will be balanced against rising oil prices and supply issues in some categories.”
Operator's need to stay on top of price trends, according to CGA client director of food Fiona Speakman.
She said: “After relatively modest inflation in November, December’s Foodservice Price Index returned to the trend of substantial pricing pressure that dominated 2017.
“With many important areas of the market facing sector-specific challenges and the value of sterling still low, the index confirms that any lull in inflation is likely to be short-lived.
“For all foodservice businesses, it emphasises the vital importance of staying on top of price trends and setting purchasing strategies accordingly in 2018.”
