Inflation in foodservice sector tops 10%

All 10 of the Index’s food and drink categories recorded both year-on-year and quarter-on-quarter inflation in the month, with the oils and fats (up 3.7%), dairy​ and fruit categories having seen the highest rates of year-on-year increases. 

Prestige Purchasing CEO Shaun Allen said: “High levels of inflation are clearly around for the long haul.

Volatile environment 

“Our analysis showed the delta between operators with average versus good market pricing is now over 9%, which is about 3 percentage points of gross margin.

“Operators would be well advised to invest in skills and resource to manage this volatile environment.”

According to the report, the key factors driving inflation included soaring energy costs and Russia’s invasion of Ukraine, which had severely disrupted the supply of food staples including grains and oils and pushed up the costs of production and distribution via higher crude oil prices and restricted gas supply.
Furthermore, according to CGA, foodservice had also continued to face increased wage bills, with UK job vacancies reaching 1.3m in May, while various micro supply and demand issues continued to affect prices in many areas.

Relentless pressure 

This comes as last week saw the latest data from Lumina​ Intelligence Eating & Drinking Out Panel show customer spending and penetration in the hospitality sector was flat, according to data aggregated in the 12 weeks ending 12/06/2022.
In addition, the report predicted there was little chance inflation will fall below 7% until at least the second quarter of 2023 and may yet rise further over the remaining months of 2022.
CGA by NielsenIQ client director James Ashurst said: “Inflation now hasn’t been below double digits since January, and the relentless pressure on prices is squeezing businesses across the food and drink sector.

“With the war in Ukraine and consumers’ cost-of-living crisis mounting, we must expect challenges to get worse before they get better.”