The data from CGA showed year-on-year inflation of food and drink was running at 7.9% in January 2022, more than twice the rate in December 2021.
CGA client director James Ashurst said: “Hospitality was starting to make a robust recovery from the effects of the pandemic and following a tough winter period.
“These inflation figures pose further challenges to businesses which are already squeezed by rising costs and pressure on supply chains.”
Rising costs across the board
For the first time since its inception in 2016, every category in the index showed a month-on-month increase, with food rising 4.4% across the board, compared with the previous month.
Notable category movements month-on-month in January include oil and fats (up 7.9%), milk, cheese, and eggs (up 6.8%), mineral water, soft drinks, and juice (up 2.9%) and fish (up 2.6%).
This comes after The Morning Advertiser reported warnings from operators regarding significantly higher poultry costs earlier this week.
On top of rising food prices, operators across the sector are also faced with a rising cost in energy, petrol, and diesel as well as debt following the pandemic, while Brexit has stifled the labour market, leading to shortages of products and an increase in staff pay rates and Russia’s invasion of Ukraine poses economic uncertainty.
However, the report noted these unusually high levels of inflation were recorded before the Russian invasion of Ukraine, though it has been anticipated to prompt further price rises across a number of food categories including wheat, sunflower oil, barley, corn, potatoes, and rice.
Optimise supply
Sanctions on Russia are also likely to cause rises in oil and gas prices, driving food and drink inflation even higher.
Prestige Purchasing CEO Shaun Allen said: “Even before the Russian invasion of Ukraine we were predicting high levels of inflation during the first half of 2022.
“A protracted conflict, coupled with long-term sanctions on Russia’s economy might well raise inflation to levels not seen for a generation.
“Operators can no longer take supply stability for granted and should take action to optimise their supply.”