Foodservice price inflation hits 21.6% in May

Foodservice price inflation in the UK rose to 21.6% in May, just below the record high of 22.9% seen in December 2022, according to the foodservice price inflation index from CGA.

This number is slightly higher than in April where foodservice price inflation was at 21.4%.

At the same point last year, inflation in the Index stood at 10.2%, which means that prices have risen about 34% since May 2021.

Experts had hoped that a slowdown in inflation in the first quarter of the year would see pressure eased for the rest of the year but this has not been the case.

Improvements in many key upstream indicators have failed to materialise causing the unexpected rise in inflation.

Food and drink price rises combined with increased costs in other areas like energy bills mean that many businesses are operating on very tight margins.

Shaun Allen, CEO of Prestige Purchasing said: “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. 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.”