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Tue 27th Jun 2017 - Foodservice inflation hits 9% in May, highest level in nearly nine years
Foodservice inflation hits 9% in May, highest level in nearly nine years: Inflation in wholesale foodservice prices hit 9% in May – the highest level in nearly nine years, the latest CGA Prestige Foodservice Price Index has revealed. The rate of inflation is a significant increase on the figure of 5.8% in April. It is also more than four times as high as inflation in the equivalent Consumer Price Index, which measured 2.0% in May, according to the Office for National Statistics. It marks the sharpest inflation in foodservice prices since August 2008, and for the third month in a row, foodservice prices were higher year-on-year across all ten sub-categories measured by the index. An increase in the farm gate price of milk, low stocks and a rise in global demand have all fuelled a sharp rise in dairy prices, where inflation is 9.9% year-on-year. Inflation in the fruit category was even higher at 12.7%, with the weak pound substantially pushing up the costs of items imported from around the world. Poor weather and disease in some key fruit-growing regions of the UK and Europe have reduced stocks and pushed prices up further. Many other macro factors have added to inflationary pressures in foodservice, including UK political uncertainty surrounding Brexit negotiations and the general election, and fluctuating oil prices. More issues are impacting specific areas of foodservice, such as sea lice problems pushing up fish prices, and tightening wheat supply adding to cost burdens in bread and cereals. Although there are signs inflation in some food items may start to ease, the figures from the latest CGA Prestige Foodservice Price Index continue a sharp upswing in costs for the sector in 2017. The report said the widening gap between the rate of inflation here and in the Consumer Price Index emphasised the need for foodservice businesses to seek expert independent help with their procurement and pricing strategies. Christopher Clare, head of consulting and insight at Prestige Purchasing, said: “There are few places to hide from the increased costs we are seeing flow through to operators – we would always recommend, though, operators test the competitiveness of their pricing in the market place and fully understand the justification for any increases.” Graeme Loudon, commercial director at CGA Strategy, said: “Headline price inflation of 9% reveals the scale of the challenges facing foodservice businesses at the moment. The weak pound, political uncertainty and a host of supply and demand factors are whipping up something of a perfect storm, and operators will need to be at the top of their game on procurement in the months ahead.” The CGA Prestige Foodservice Price Index is jointly produced by Prestige Purchasing and CGA Strategy, using data drawn from more than 50% of the foodservice market and about 7.8 million transactions per month.

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