‘Further uncertainty’ ahead for foodservice prices

08/01/2019 - 08:59
Year-on-year inflation in wholesale foodservice prices hit +6% in November, CGA and Prestige Purchasing’s latest foodservice price index this week revealed.

Driven by ‘steep rises’ in dairy, fish, oils and fats, the index showed that the cost of milk, cheese and eggs was particularly high at +13%.

While grass growth reportedly ‘helped’ UK milk production remain ‘relatively strong,’ new advice on the consumption of raw and runny eggs is expected to increase demand of the ingredient this year.

The highest level of inflation was within the fish and oils and fats categories. The former due to Barents Sea fishing quotas and heavy demand for salmon in the run-up to Christmas; the latter due to decline in UK wholesale butter prices.

The cost of sugar was meanwhile down -12% in November, with CGA and Prestige putting this down to overproduction.

Prestige Purchasing chief executive, Shaun Allen, said: “These latest inflation figures show how volatile the supply markets continue to be within the foodservice and hospitality sector, and it is only anticipated to become more challenging as we head into 2019 with the outcome of Brexit still to be determined.

“It is crucial that businesses take appropriate measures and actions to manage the future risks of inflation.”

Fiona Speakman, CGA client director of food, added: “As 2019 opens, the latest figures from the Foodservice Price Index are a reminder that inflation will be a major challenge for the foodservice sector over the next 12 months.

“Indications of deflation in sugar-related categories are more than offset by high inflation in key areas like fish, dairy, oils and fats, and with more turbulence in supply on the horizon businesses will need to stay right on top of market developments and trends.

“The foodservice sector has been challenged by relatively high levels of inflation throughout 2018, and as the year draws to a close the upward trend shows no sign of abating.

“Weather patterns have worked against the supply chain and micro factors like the soft drinks industry level and trade tariffs, have made conditions even tougher.

“Businesses will be hoping for a more stable 2019 but the on-going effects of the weather on production coupled with the shadow of Brexit means further uncertainty is more likely.”

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