Foodservice price inflation rose to 9.3% this August – up from 7% in July

02/10/2017 - 10:33
CGA’s latest Prestige Foodservice Price Index reveals that wholesale foodservice price inflation grew to 9.3% in August – up two percentage points from July.

Putting the increase down to “the weak pound, which is pushing up the price of imports from overseas; and rising oil prices, which are adding to the costs of transportation and packaging" as well as Brexit uncertainty, nine of the ten food and drink categories measured had higher levels of inflation in August 2017 compared to 2016.

Items particularly affected include: fish, up from 5% in July to 22.7%; oils and fats, also up to 15.4%, and milk, cheese and eggs at 14.7%. CGA Strategy and Prestige Purchasing, who jointly produced the Foodservice Price Index, also warned that fruit and vegetables could face future pressures as labour shortages weaken supplies and increase the UK’s dependence on imports.

The only category to see year-on-year deflation in August was sugar and confectionary, where prices fell by 2.1% compared to 2016. Improved supplies in the UK meant that meat prices also fell to a four-month low, but was still more expensive than in August 2016.

Christopher Clare, head of consulting and insight at Prestige Purchasing, said: “With the CGA Prestige Foodservice Price Index up over two percentage points on [July], we are now experiencing the highest year on year movement since the index began. We have seen high increases in nearly every category compounded by a weak pound and a number of supply issues in key categories.”

With Brexit negotiations “likely to hold down the value of sterling and oil prices unlikely to fall in the near term,” CGA predicts “little respite for inflation in most food and drink categories in the coming months.”

Commercial director Graeme Loudo added: “After a couple of months of a modest easing of pressures, our latest Foodservice Price Index reveals another upswing in inflation.

“The weak pound and increased oil costs are both conspiring against UK businesses, and specific categories of food and drink are facing added challenges like weather-related production issues and changing trading patterns.

“All of these issues are outside the control of the foodservice supply chain in the UK, but by carefully monitoring trends and refining purchasing strategies, foodservice businesses can at least mitigate some of the inflationary impacts.”

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