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Morning Briefing for pub, restaurant and food wervice operators

Mon 27th Mar 2017 - Foodservice inflation hits 3.7% in February, further rises likely to follow
Foodservice inflation hits 3.7% in February, further rises likely to follow: Foodservice price inflation rose to 3.7% in February compared with last year, with further increases likely to follow in the next few months, according to the latest CGA Prestige Foodservice Price Index. It continues an upswing in wholesale foodservice prices, following year-on-year increases of 1.8% in December and 2.9% in January. It further widens the gap between inflation in the sector and inflation experienced by the public, as measured by the Consumer Price Index. Month-on-month inflation from January to February was 0.6%, higher than seasonal averages. Rising foodservice inflation has been caused by a combination of factors, including a lower-than-usual supply of key items and a weak pound. Of the ten sub-categories measured by Prestige Purchasing and CGA Strategy, nine saw higher prices year on year. Areas that have experienced particularly high inflation include fish, with prices up more than 8% on February 2016 following poor cod catches, increased demand from China and sea lice problems for salmon producers. Sugar, chocolate and other confectionery have seen prices noticeably higher as supply of cane sugar into the UK has reduced. Volatility in sugar has also led to an increase in soft drinks prices of more than 6%. Vegetables have also seen prices rise significantly as poor weather conditions have hampered production in key European regions. With the exchange rate for sterling likely to remain low, the Foodservice Price Index forecasts more increases in inflation between now and late summer, with rates well above seasonal averages. However, there are indications pressures may ease a little towards the end of 2017, with the recent fall in oil prices a welcome development. Prestige Purchasing head of consulting and insight Christopher Clare said: “Inflationary pressure looks set to continue, with our Foodservice Price Index forward forecasts showing we might hit 5% in the next couple of months. We are in for a continued period of volatile pricing and operators will find their supply chain is demanding extra focus and that good data is key.” CGA Strategy chief executive Phil Tate added: “Our latest Foodservice Price Index reveals no respite in inflationary trends. The moderate-to-steep rises in nearly all categories are placing unwelcome pressure on businesses in the foodservice supply chain, and with sterling continuing to struggle there is little to suggest inflation will ease soon. It reinforces the need for operators to adopt sharp purchasing strategies in the months ahead.” The Foodservice Price Index is jointly produced by Prestige Purchasing and CGA Strategy, using data drawn directly from the foodservice market covering circa 7.8 million transactions per month. More information on specific categories is available on a subscription basis.

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