Food and beverage inflation hits 12-month low

Foodservice pricing reached its lowest point for 12 months in February 2020 with the majority of food and beverage categories showing no or minimal year-on-year inflation, the latest edition of the CGA Prestige Foodservice Price Index has revealed.

However, with the global Covid-19 pandemic now causing “major disruption” to global supply chains, and prompting shutdowns of some industries and consumer sectors worldwide, the CGA said it is likely that pricing will be “volatile in the coming months”.

Categories already impacted by the pandemic include soft drinks, where large manufacturers like Coca-Cola have seen delays to artificial sweetener shipments – leading to predictions of tighter supplies of drinks in the longer term should Chinese operations remain restricted.

Despite this, the sugar category recorded a small rise in pricing in February, partly due to a 24% drop in India’s sugar output after a prolonged drought followed by flooding. With India in lockdown during its main sugar harvest, a further tightening of supply on a global scale is now expected.

Prestige Purchasing CEO, Shaun Allen, said: “This is a concerning time for supply chains across the globe. We are already seeing categories affected by the Covid-19 pandemic, and there will be many more affected before we are back to normal.

“Whilst many operators are currently closed, buyers will need to be prepared for a different landscape both in supply and demand once they are up and running again.”

CGA client director of food and retail, Fiona Speakman, added: “After a prolonged period of relatively high inflation in the foodservice sector, the last few months have shown signs of welcome stability—but that has been shattered by the COVID-19 pandemic.

“With out-of-home eating and drinking sectors in lockdown in many countries and availability and distribution facing major disruption, we are likely to see a great deal of inflationary volatility in the months ahead.”

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