Ingredients inflation easing but prices still rising

The combination of market instability and Brexit uncertainty means prices will keep rising in the months ahead, according to the latest edition of the Foodservice Price Index from CGA and Prestige Purchasing.

The fish category remains the most volatile with its price movements. Prices are well above the levels seen at the same time last year and rose by 10% month on month.

The price of salmon peaked in the run-up to Easter but with good weather this spring and reduced demand, along with likely increases in cod and haddock landings, the index predicted some easing in this category.

Breads and cereals have also risen and while there is a seasonal trend for price increases at this time of year, poor weather in the US is further firming global prices.

Weather impact

Significant winter storms and flooding from melting snow resulted in substantial losses of corn, wheat and barley and the index predicted the prospect of significant delays to spring plantings. This would mean the US may look more to imports, strengthening the grains market as a result.

The largest deflationary movement in March was seen in the fruit category where prices fell substantially.

Spanish citrus recently suffered from flooding, resulting in a climb in the index since December. Due to buyers now favouring cheaper, imported produce from Egypt, Turkey and South Africa, prices are beginning to ease.

Prestige Purchasing chief executive Shaun Allen said: “While inflation – after a period of unprecedented increase – is now falling, we still remain in a period where each month sees further price increases in most categories.

“Operators in fixed-term pricing agreements can expect challenging negotiations when they emerge from their protection.”

Market challenges

CGA client director for food Fiona Speakman highlighted the continuing volatility in prices across the market.

She said: “While inflation appears to be slackening a little against the very high levels of recent times, there is a still a significant degree of volatility across the sector.

“The sharp contrast between inflationary categories like fish and deflationary sectors like fruit shows prices are very sensitive to market challenges and dynamics.

“Businesses will be hoping that general inflation continues to ease but macro and micro challenges mean there is likely to be more instability ahead.”