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Morning Briefing for pub, restaurant and food wervice operators

Mon 5th Nov 2018 - Oils, fats and fish drive foodservice inflation as buyers anxiously await Brexit
Oils, fats and fish drive foodservice inflation as buyers anxiously await Brexit: Oils, fats and fish continue to trade at prices more than 25% higher than last year, the latest edition of the Foodservice Price Index from CGA and Prestige Purchasing has revealed. Recent falls in the hot beverages category have corrected, while fruit prices continue to reduce from the highs of the summer months. Sugar prices fell a further 5.2% in September, in line with recent trends. The index confirmed the possibility of a no-deal Brexit continued to dominate the risk agenda for buyers. Recent indications from prime minister Theresa May that the UK’s Brexit withdrawal agreement and declaration of future trading relationships were likely to complete this month have been welcome news. The fish category showed quota regimes continue to push cod and haddock prices higher. Salmon pricing extends the recent trend of violent swings, with a near-20% drop in the summer reversed and the price creeping slowly down again since. Fish imports have been affected by recent declines in the pound, while the imposition of a 10% trade tariff by the US on Chinese fish imports has created turbulence in world markets, in turn pushing up demand and prices in other countries. It is usual to see the fish index drift down over the winter months but a material difference is not expected in the foreseeable future. The edible oils and fats index has risen every month since February and is now at unprecedented levels. Much of the rise has been driven by a huge surge in the price of butter during the past two years, where the upstream wholesale price reached a peak in October 2017 of almost three times the level of the prior year. About 70% of this price spike came off in the early part of 2018 but weather problems have contributed to a further rise, to a mid-point between the two. The report said this was expected to ease during the winter as the upstream wholesale price reduces. Prestige Purchasing chief executive Shaun Allen said: “We have seen a much higher level of volatility within some food supply markets this year, which once again is having an impact on margins for operators, who are already under pressure in this area.” Fiona Speakman, CGA client director – food, added: “Steep inflation in the oils and fats and fish categories is another sign of the volatility experienced by the sector since the UK’s referendum on leaving the EU. There are many other inflationary pressures beyond Brexit, of course, but we see no sign of the turbulence easing as the date for leaving the EU draws nearer and an anxious few months lie ahead as buyers await clarity on the terms of departure.” The CGA Prestige Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using foodservice data drawn from 7.8 million transactions per month. More information on specific categories is available on a subscription basis.

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