Food and drink inflation hits 15% for first time

07-Oct-2022 - Last updated on 07-Oct-2022 at 08:26 GMT

Long-range forecast: research reveals food and drink inflation is likely to fall slowly next year (credit: Getty/zoranm)

Food and drink price inflation in hospitality hit 15% for the first time in the history of the CGA Prestige Foodservice Price Index in August, its latest data shows.

It also means this is the seventh month in a row that inflation has been at 10% or higher, according to the data, which is compiled by CGA by NielsenIQ and Prestige Purchasing.

Droughts, the war in Ukraine and spiralling costs of commodities, energy and labour throughout the supply chain, the weakened sterling currency have all contributed to the record high. The index has now recorded double-digit inflation in every month of 2022 since February, with prices increasing nearly 2% from July alone.

All categories up

Every category of the index experienced year-on-year inflation, with two key segments – dairy and oils & fats – surpassing 4% month-on-month. Only two – fruit and sugars – registered a small fall in prices from July.

Very dry weather in the UK and Europe had a severe impact on many crops and pastures, though conditions have been more favourable in recent weeks.

There has also been some easing in commodity markets and the price of oil, but with energy pricing very uncertain and the Ukraine war continuing, the market is likely to remain volatile for some time. Steep falls in the value of sterling continues to push up the cost of imports and fuel inflation.

Prices ‘won’t fall until 2024’

Prestige Purchasing CEO Shaun Allen said: “In the months ahead, it is likely that we will reach peak inflation then see some levelling-off before a gradual fall during next year. But falling inflation does not mean prices will go down. For at least the full year of 2023, we expect that they will just increase more slowly.

“With so many other pressures it would be easy for operators to take the eye off the ball of managing supply prices, which in this market could be very costly.”

James Ashurst, client director at CGA by NielsenIQ, added: “Inflation is having a severe impact on businesses and consumers alike, and foodservice is caught in the eye of a fierce storm. While some pressures may be easing, a tough winter lies ahead.

“The foodservice sector remains a vibrant contributor to the UK economy, but it deserves urgent, targeted and sustained government support to mitigate inflationary challenges and sustain vulnerable businesses.”