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Morning Briefing for pub, restaurant and food wervice operators

Wed 14th Jun 2023 - Foodservice price inflation jumped back above 20% in April but expected to ease through rest of 2023
Foodservice price inflation jumped back above 20% in April but expected to ease through rest of 2023: Year-on-year inflation in foodservice prices rose unexpectedly to 21.4% in April 2023, according to the new edition of the CGA Prestige Foodservice Price Index, but is expected to ease through the rest of 2023. Price increases had begun to slow in the first quarter of this year, and inflation dipped below 20% in March for the first time since mid-2022. However, the rebound in April underlines the severe cost pressures facing businesses throughout the foodservice sector, said the index. The rise was driven by pressure in the vegetables, fish and sugar and jams and syrups categories, each of which saw prices increase by between 3% and 4% month-on-month. Potatoes, in which the UK is more than 90% self-sufficient, suffered a particularly sharp increase during April in the wake of rising production costs, labour shortages, lower storage crops and short supply in many parts of Europe. This supply/demand imbalance looks set to continue for much of the rest of 2023. More optimistically, conditions within three major upstream influencers on the price of food – oil, exchange rates and commodity markets – are now relatively benign compared with the volatility of 2022. The cost of Brent Crude oil has eased from $87 per barrel at the beginning of April to below $80 at the end of the month, with more falls expected during May, while sterling has remained stable. Inflation in categories affected by high inflation since the start of the war in Ukraine, including oil and fats and dairy, continue to be subdued. Prestige Purchasing chief executive Shaun Allen said: “In spite of these April increases, we expect to see inflation ease slowly over the course of 2023 as commodity pricing and prior year impacts kick in. The major question that remains is the speed of that decline as energy, labour costs and climate change remain significant constraints on progress with inflation reduction.” James Ashurst, client director at CGA by NIQ, added: “On top of soaring costs in other key inputs and the impact of the cost-of-living crisis on consumers, it leaves hospitality businesses facing some seismic challenges. The long-term outlook for this sector remains good, but trading remains exceptionally difficult.”

UKHospitality – sector can deliver £29bn economic boost and create 500,000 jobs by 2027 with right support: The hospitality sector can deliver a £29bn economic boost to the UK and create 500,000 jobs by 2027 with right support, UKHospitality has said. A new report launched at the trade body’s summer conference reveals that in the past six years, hospitality has increased its annual economic contribution by £20bn to £93bn. It also shows that employment in the sector has risen to 3.5 million, making hospitality the third largest employer in the country. The report, produced by Ignite Economics, also sets out how hospitality operates at the very centre of the economy. In 2022 alone – and in spite of post-pandemic challenges still stifling growth – it contributed £54bn in tax receipts to the Treasury, generated £20bn worth of exports and £7bn in business investment. UKHospitality chief executive Kate Nicholls said: “These figures show just how much of an economic powerhouse hospitality is. Despite going through a pandemic and a cost-of-living crisis over the past six years, as a sector we have continued to overcome challenges to increase our value to the economy and cement our position as a major employer. This report shows what can be achieved if we can stimulate growth, bear down on inflation and have an enabling and supportive policy environment in place for hospitality.” She added: “I urge the government to seize the opportunities available and unleash the incredible potential of hospitality. This means tackling short-term issues that are stifling further growth, like enormous energy costs, food and drink inflation and damaging labour shortages, and really looking at the long-term structural issues holding businesses back, across business rates, licensing and planning. I’m incredibly proud of the resilience our sector has shown in recent years and the fact we continue to be a significant source of economic growth. Our sector has a long track-record of growing rapidly and driving the economy and I hope the potential of hospitality is harnessed by the government.”

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