Food inflation hits record high 24% at year end

25-Jan-2023 - Last updated on 25-Jan-2023 at 09:21 GMT

Prices hikes for customers inevitable: food inflation is almost a quarter higher than a year ago (credit: Getty/Sigrid Gombert)

The CGA Prestige Foodservice Price Index (FPI) ended 2022 at record highs, with the food basket almost one quarter higher than December 2021 but including drinks, it ended slightly lower at 22.9%.

The figure marked the 11th consecutive month of double-digit inflation after a year of inflationary pressures for foodservice businesses. Year-on-year inflation in the food basket of the index, not including beverages, was 24%.

All 10 categories of the index from CGA by NielsenIQ and Prestige Purchasing recorded inflation of at least 10% in December, with more than half topping 20%. The oils and fats category led the surge, with year-on-year inflation surging to a huge 47%.

However, the future holds a mixed bag with oil and exchange rates, the two leading upstream influencers on food prices, being more benign than during most of 2022 with the UN’s FAO Food Price Index falling by 1.9% in December 2022, the 9th consecutive month of decline to take it to 1% below its value a year ago.

End to war needed

However, energy costs continue at extremely high levels against a background of tightening Government support while higher labour costs across supply chains show few signs of relief. With a significant easing in prices only likely to begin with an end to conflict in Ukraine, the outlook for 2023 therefore remains volatile.

Prestige Purchasing CEO Shaun Allen said: “The next step on our inflation journey will be when the current 2% to 4% month-on-month increases start to slow down.

“We expect this to start to happen in the months ahead but we are likely to experience an extended period where prices continue to go up, but just more slowly.”

Conditions to increase prices

Allen continued: “These market conditions provide an opportunity for some suppliers to increase prices ahead of market, and buyers should seek hard data to verify and benchmark any increases during 2023.”

CGA by NielsenIQ client director James Ashurst said: “Businesses up and down the foodservice supply chain were besieged by inflation in 2022 and, as we enter 2023, there is little respite in sight.

“Alongside the cost-of-living crisis for consumers, soaring food and drink prices are piling enormous pressures on hospitality, and sustained government support is needed to protect businesses and jobs in this vital sector of the UK economy.”