Food and drink supply markets have been hit by widespread distribution problems and a spike in demand following the reopening of hospitality, the CGA Prestige Foodservice Price Index reveals. Year-on-year food inflation stood at 1.6% in June, having levelled off at a time of year when it typically falls. The remaining months of 2021 are likely to see further increases in the level of food inflation, as sector demand returns towards pre-pandemic normality and extra supply costs and wage inflation feed into price increases.
June saw particular supply issues in the south of England, after the return of restaurants, pubs, bars and other venues, amplified by warm weather. Problems were compounded by a shortage of labour, particularly HGV drivers, as well as insufficient manufactured stocks and Brexit-related challenges with imported goods.
As June progressed, many suppliers put mitigation strategies in place, including the refusal of some orders to cap demand and improvements to wages and conditions to attract new employees. The situation stabilised in July, but demand is likely to peak again in early September when schools and businesses increase order levels.
The Foodservice Price Index reveals that food inflation stood at 1.6% year-on-year in June, having levelled off at a time of year when it typically falls. Non-alcoholic beverage prices increased month-on-month, but remain below the levels of 2020. The remaining months of 2021 are likely to see further increases in the level of food inflation, as sector demand returns towards pre-pandemic normality and extra supply costs and wage inflation feed into price increases.
Shaun Allen, CEO of Prestige Purchasing, said: “June brought an unwelcome realisation to operators and suppliers alike that availability of labour will be a challenge for the foreseeable future. The difficulties with HGV drivers has been particularly impactful, and operators should consult carefully with suppliers to ensure that supply chains are as lean and efficient as possible.”
Precis
Price inflation steady as disruptions to food and drink supply hit reopening
Food and drink supply markets have been hit by widespread distribution problems and a spike in demand following the reopening of hospitality, the CGA Prestige Foodservice Price Index has revealed. In June, food inflation stood at 1.6%, having levelled off at a time of year when it typically falls. The remaining months of 2021 are likely to see further increases in the level of food inflation, as sector demand returns towards pre-pandemic normality and extra supply costs and wage inflation feed into price increases.
