Foodservice price inflation falls below 20%

Foodservice price inflation fell to 18.9% in March, the first time it has dropped below 20% in five months, according to data from CGA’s Foodservice Price Index.

The fall in March is the fourth consecutive fall in year-on-year inflation.

While prices increased by 0.7% month-on-month between February and March, there are clear signs that inflation is steadily slowing after challenges throughout the last year.

The downward trend has been driven by an easing of prices in key commodity markets.

Dairy and oils and fats categories within the foodservice price index both recorded month-on-month deflation on the back of improved availability.

Only two of the index’s ten categories reported month-on-month inflation of 2% or more.

Inflation has also been slowed by significant falls in the cost of crude oil, a major upstream influencer on the price of food.

Crude prices fell 24.4% year-on-year and 4.4% month-on-month, which should help to alleviate supply costs.

Shaun Allen, Prestige Purchasing CEO, said: “The continued fall in inflation will be some welcome relief for the hospitality sector. However, prices remain high and with eight out of ten categories still reporting month-on-month increases, the overall cost of food and beverages in the sector continues to rise just at a slower rate.

“The pressure on operators’ margins is still increasing and acting now to optimise their supply chain and limit the impact is critical.”

James Ashurst, client director at CGA by NIQ, added: “After months of relentless pressure on prices we can be cautiously optimistic that foodservice inflation is at last softening. But much damage has already been done to businesses’ costs and consumers’ spending, and with various areas of food and beverage supply still volatile, conditions will remain difficult for some time to come.”