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Tue 12th Apr 2022 - Year-on-year inflation in foodservice sector hit 10.2% in February, further increases ‘inevitable’ that ‘could create conditions worse than covid’
Year-on-year inflation in foodservice sector hit 10.2% in February, further increases ‘inevitable’ that ‘could create conditions worse than covid’: Year-on-year inflation in the foodservice sector hit 10.2% in February 2022, with further increases on the horizon that could create conditions “worse than covid”. The double-digit increase was fuelled by a surge in demand, the lingering impacts of covid, additional costs of trade post-Brexit and increases in energy and packing prices, according to the latest edition of the Foodservice Price Index from CGA and Prestige Purchasing. Inflation has been further heightened by the comparisons with February 2021, when Britain’s lockdown temporarily eased the pressure on prices. The report also highlights the volatility of pricing, with a wide range of highs and lows across its ten categories. The sugar category recorded a drop of 10.9%, while oils and fats were up by 56% year-on-year. Five categories have inflation of more than 20%, with fish, fruit, dairy and soft drinks also affected. Inflation will become even more acute following Russia’s invasion of Ukraine, the report predicted, with stress on energy markets generating new challenges in key commodities like wheat, oil and fats and fish and fertilisers. This is likely to drive up prices for months to come, and further increases in inflation are inevitable. Shaun Allen, Prestige Purchasing chief executive, said: “Inflation now constitutes an existential threat to many businesses in the hospitality sector. The Ukraine war has the potential to drive an extended period of increasing food and drink costs, which if coupled with recent changes to VAT, rising labour costs and potentially falling volumes, could well generate conditions worse than during the pandemic.” James Ashurst, client director at CGA, added: “Two years of covid turmoil have weakened many businesses across the foodservice sector, so the huge upward pressure on prices comes at the worst possible time. The long-term future of the foodservice sector remains good, but there are undoubtedly some turbulent times ahead.”

Strong growth for hospitality spending in March and takeaway still soaring, but cost of living causing consumer concern: Spending in hospitality settings saw “strong growth” of 18.3% in March compared with the same period in 2019, according to data from Barclaycard. This was boosted by a 41.7% surge in spending at bars, pubs and clubs following the lifting of all remaining social distancing restrictions at the end of February, Barclaycard’s report said. Entertainment also enjoyed an uplift of 20.3%, driven by cinema goers watching major releases such as The Batman, while takeaways and fast food soared 79.6% compared with three years ago, reflecting a lockdown trend that has become a mainstay for many households. And in a sign that the staycation boom is set to continue, hotels, resorts and accommodation enjoyed a 15.3% boost compared with the same period in 2019. However, nine in ten consumers are concerned about the negative impact of rising household bills on their personal finances – a 2% increase on February and 5% higher than in December. But while optimism about the future of the UK economy has fallen to 27%, its lowest level since January last year, Brits’ confidence in their own household finances remains steady at 62%. José Carvalho, head of consumer products at Barclaycard, said: “Rising fuel prices and household bills are clearly starting to influence consumer behaviour. While this may dampen growth in the months ahead, we shouldn’t overlook the expected heatwave later in April, and the fast-approaching Easter holidays, both of which are likely to boost non-essential spending.”

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