Price inflation in foodservice hits 5.8% in April 2017

Weak pound and sharp hikes in fish and coffee costs keep inflation high in the latest edition of the CGA Prestige Foodservice Price Index

Inflation in wholesale foodservice prices reached 5.8% in April, the new edition of the Foodservice Price Index from Prestige Purchasing and CGA Strategy reveals—continuing a sharp upswing in costs for the sector in 2017.

The figure is in line with price inflation of 6.0% in March—a figure that in turn continued an acceleration from 2.9% in January and 3.7% in February. Inflation has been driven by a combination of macroeconomic factors including the weak pound and micro pressures on specific food items.

Categories seeing particularly sharp price increases in April include fish, where inflation stood at 13.4%, caused in part by a sea lice problem and associated treatment costs. Inflation in the hot beverages category meanwhile reached 11.0%, with coffee prices affected by weak sterling and declining stocks of some bean varieties. A third category to see notable pressures is bread and cereals, where a tightening supply of wheat meant prices were 2.0% than a year previously.  

For the second month in a row, April prices were higher year on year across all ten sub-categories measured by the CGA Prestige Foodservice Price Index. The rises have pushed the headline rate of inflation to more than three times that of the Consumer Price Index*, which was 1.5% in the 12 months to April. With the pound still struggling against foreign currencies and Brexit uncertainty continuing, the gap between the two inflation measures is likely to remain substantial in coming months.

But the Foodservice Price Index also reveals signs that inflation in some food items—while still high by historical levels—may be starting to ease a little.  Bright spots include fruit, where price inflation was relatively modest at 1.9% in April 2017—the smallest increase of any of the Index’s sub-categories, and down on March’s figure. Vegetable price inflation was running at 4.4% in April, a sharp drop in the rate of 10.4% in January. Increased UK production and reduced reliance on imports have helped to ease inflationary pressures here.

Inflation in foodservice prices continues to run higher than the sector would wish, and the pound’s exchange rate with the euro, dollar and other currencies means imports will continue to be much more costly than in recent years. But with domestic production increasing and some other pressures possibly easing, we can cautiously hope for some respite in key costs in the coming months.
— Graeme Loudon, Commercial Director of CGA Strategy

Christopher Clare, Head of Consulting & Insight at Prestige Purchasing, said: “As the summer kicks in we have started to see some relief in pricing in a few categories.  Whilst we would be hard-pushed to describe this as unusual for the time of the year, many of the larger impacts will begin to be factored out of inflation measurements and so, like CGA, we are cautiously optimistic.”

The Foodservice Price Index is jointly produced by Prestige Purchasing and CGA Strategy, 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. 

*CPI for Food & Non-Alcoholic Beverages

For further information, interviews or images, contact Prestige Purchasing on 01908 222678 or christopher.clare@prestige-purchasing.com.

About Prestige Purchasing
Prestige Purchasing is one of the UK’s leading specialists in procurement and supply chain management for the hospitality, catering, leisure, retail and private healthcare sectors.

About CGA Strategy
CGA is the world’s leading business intelligence and strategic consultancy provider for the out of home leisure market; the definitive source of integrated consumer insight and market measurement informing strategies for our clients’ growth. We live, love and breathe our industry, harnessing our passion and knowledge to help the market make smarter and more informed decisions. CGA works closely with consumers, retailers, suppliers, trade bodies and government so that our expert consultants can bring every strategic insight to life.