Foodservice price inflation reached 6% in March 2017, thanks to a dramatic rise in the price of fish and continued inflation in sugar, meat, cereals and vegetables.
The latest CGA Prestige Foodservice Price Index showed accelerated inflation in wholesale foodservice prices is accelerating, following year on year inflation of 1.8% in December, 2.9% in January and 3.7% in February. It contrasts to the Consumer Price Index, which changed 1.2% in the 12 months to March.
The index shows prices in the foodservice sector continue to be affected by a host of factors including the weak pound, rising oil prices and lower than usual supply of many items, as well as climatic and regional issues. The inflation rate of 6% is substantially up on historical averages, and March prices were higher year on year in all ten sub-categories of the index.
The most significant inflation in March came in the category of fish, where prices were up by 19.9% on a year previously. It follows a lean start to the 2017 for US salmon fishermen, poor cod catches and sea lice problems adding to farming costs. Other notable figures revealed in the latest edition of the CGA Prestige Foodservice Price Index include:
• Sugar, chocolate and other confectionery inflation now over 10%, thanks to lower than usual exports and rising prices from UK beet producers
• Meat and poultry prices up significantly year on year, with the weak value of sterling increasing demand for British products overseas
• Prices now inflationary in the milk, cheese and egg category following the rising farm-gate cost of milk—a notable increase on the deflationary figure for this category a month ago.
There is some respite in inflation in vegetables, where although prices are still notably up year on year, the level of inflation has decreased. As 2017 goes on, growth in British vegetable production should help to push down inflation further. Inflation in some other categories like fruit is meanwhile relatively restrained. But with few other positive pricing trends and sterling set to remain weak during Brexit negotiations, the Foodservice Price Index predicts that inflation will remain well above average over the next few months.
Christopher Clare, Head of Consulting & Insight at Prestige Purchasing, said: “Whilst the inflationary figures regarding fish will no doubt make the headlines this month, the overall level of inflation has really been driven by ‘across the board’ price increases as the real effects of a prolonged depression in the value of sterling take their toll on operators – being informed at times like this is critical.”
Phil Tate, Chief Executive of CGA Strategy, said: “Our latest CGA Prestige Foodservice Price Index reveals the scale of inflationary pressures facing the foodservice sector at the moment. The weak pound is causing major headaches for businesses in the supply chain that rely on imports, and various other external factors are adding to the burden. With inflation unlikely to ease soon, foodservice companies will need to adopt smart pricing strategies and stay nimble and flexible in their purchasing in the coming months.”