The drop to 2.2% in October, according to the latest Foodservice Price Index report from Prestige Purchasing and CGA by NIQ, provided further relief for businesses and consumers after several years of high inflation.
October also recorded month-on-month deflation of 0.4% with prices falling in six of the index’s 10 categories.
However year-on-year, fish was the only category to experience deflation while vegetables and sugar, jam, syrups and chocolate continued to report the highest inflation.
Serious concern
Prestige Purchasing CEO Shaun Allen said: “While the continued easing of year-on-year inflation is encouraging, the potential impact of the autumn Budget is a serious concern.
“The foodservice sector is still grappling with ongoing volatility and the possibility of further significant price increases in 2025 adds another layer of complexity.
“Operators need to remain vigilant and closely monitor the market to manage these additional challenges effectively.”
While the short-term trend was positive, the Government’s Budget in October introduced significant uncertainty into the outlook for foodservice prices next year.
The index predicted the Budget measures will add 2.3% to the previously forecasted rate of inflation.
Welcome respite
Furthermore, if additional wage and national insurance costs are passed up the supply chain in full, the report predicted food and drink inflation could rise sharply again next year and exacerbate the cost-of-living crisis.
CGA by NIQ senior insight consultant Reuben Pullan said: “Sixteen successive months of inflation decline has brought welcome respite for hospitality ahead of the crucial Christmas and new year.
“However, the Budget’s new burden on employers threatens the fragile recovery and will undermine the confidence of both businesses and consumers.
“This is a resilient and entrepreneurial sector with a bright long-term future but cost pressures are likely to make for a difficult trading environment for some time to come.”
Last month (November), the index reported year-on-year inflation fell to 2.4% in the 12 months to September, which was down from 2.8% the previous month.