Foodservice price inflation increased again on a year-on-year basis, to 21.6% in May – just below the record high of 22.9% in December 2022, according to the latest CGA Prestige Foodservice Price Index

At the same point last year, inflation in the Index stood at 10.2%, which when combined with the latest figure means prices have risen by around 34% since May 2021.

On a month-on-month basis, inflation dropped to 1.8% compared to April.

With inflation having slowed in the first quarter of the year, there had been hopes that the pressure on prices would ease during the remainder of 2023, but improvements in many key upstream indicators have failed to materialise, noted the latest report.

Vegetables, meat and poultry, and sugar, jam, syrups and chocolate are categories which are under particular strain. For example, potato prices have increased sharply due to rising production costs, labour shortages, lower levels of the crop in storage and significant short supply in many parts of continental Europe.

“Food prices in the UK hospitality sector continue to increase at just under 2% each month. This rate of increase is likely to be close to a tipping point, where dominant inflationary pressures should start to be eased by competing deflationary factors,” Shaun Allen, CEO of Prestige Purchasing said.

“The exact timing of this tipping point is uncertain whilst impacts like Brexit, energy, labour costs, interest rates and climate change remain volatile.”

James Ashurst, client director at CGA by NIQ, added: “A 34% hike in prices in just two years has been very harmful to hospitality. Added to rising payrolls, ongoing labour shortages and a heavy tax burden, it has left hospitality businesses that were weakened by Brexit and COVID-19—especially independents—in fragile condition.

“Restaurants, pubs and bars have had no choice but to raise menu prices, which in turn risks a drop in visits. As we move into the second half of 2023, businesses and individuals alike will be hoping for long overdue respite.”