Foodservice price inflation eases to 3.4% in November 2017

Relief in pressures means figure has fallen below Consumer Price Index inflation, according to the latest CGA Prestige Foodservice Price Index.

Foodservice price inflation fell for the third month in a row to reach 3.4% in November 2017, the new edition of the CGA Prestige Foodservice Price Index reveals.

It means that inflation in wholesale foodservice prices has been pushed down to its lowest point since January 2017. For the first time since the Index data was introduced, the figure has dipped to below the level of inflation recorded by the Consumer Price Index, which shows inflation running at 4.0%.

The news brings some welcome respite to the UK’s foodservice sector, which faced historically high levels of inflation throughout 2017. It shows that key inflationary pressures including the weaknesses of the pound against the Euro and dollar may now have worked through the system, and tentative signs of economic growth and progress on Brexit talks have restored some confidence to the sector. But supply issues continue to impact some areas of foodservice, and the general outlook for foodservice price inflation in 2018 and beyond remains uncertain.

The CGA Prestige Foodservice Price Index reveals an easing of inflation in most of its ten food and beverage categories. Strong supply led to prices falling year-on-year in two of them: Meat, where prices dropped by 2.8% on November 2016; and the Sugar, jam, syrups and confectionery category, where they tumbled by 10.6%. Inflation meanwhile contracted in other important categories including Fish, Bread and Cereals, and Milk, Cheese and Eggs.

However, specific supply challenges have kept year-on-year inflation up in double digits in some other categories, including Fruit and Ambient Hot Beverages like tea. As categories that are heavily reliant on imports, these have been hit especially hard by the weakness of Sterling in 2017. Concerns about Brexit and the impact of factors including La Niña and the government’s new sugar tax are also serving to dampen down any confidence about prospects for foodservice prices in 2018.

The CGA Prestige Foodservice Price Index contains exclusive in-depth analysis of inflation in these and other categories of food and beverages, and helps businesses in the foodservice supply chain keep up to date with trends, challenges and opportunities.

Christopher Clare, Head of Consulting & Insight at Prestige Purchasing, said: “As we head in to the New Year, it is encouraging to see inflation in foodservice dropping below CPI, however, our prices are still 5% higher than CPI when compared to 2015. The potential impacts of La Niña could still have a significant influence, but we remain cautiously optimistic around the macro- economic outlook.”

CGA commercial director Graeme Loudon said: “The Foodservice Price Index’s finding that inflation dropped to 3.4% in November is positive news for the sector as 2018 opens. After a year of relentlessly high levels of inflation, businesses will be relieved to see it dip below the Consumer Price Index, and the easing of pressures in meat, sugar, fish and dairy categories is especially welcome. However, any optimism that stability is returning will have to be tempered by several factors—not least the doubts about the country’s transition from the EU and the value of Sterling.”

The CGA Prestige Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using data drawn from over 50% of the foodservice market and around 7.8m transactions per month. More information on specific categories is available on a subscription basis.

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