Foodservice price inflation falls slightly but remains over 20%
On the other hand, energy and labour costs remain a significant challenge, so the rate of inflation decline may be slow for some time
Foodservice price inflation fell slightly to 20.6% year-on-year in February 2023, according to data from CGA strategy.
The figure is below the record high of 22.9% in December 2022 showing clear signs that food inflation is beginning to ease.
The full basket of food measured by the Index increased by only 0.7% month-on-month, one third of the average rate recorded in the latter part of 2022.
Major upstream influencers on the price of food, including oil prices, exchange rates and commodity markets, are now stable when compared to 2022.
The cost of oil remained level during February at $84 (£68) a barrel, and sterling was stable against the Euro at €1.13, and marginally down against the dollar at $1.20.
Oils and fats achieved the highest rate of inflation at 37% year-on-year. The sugars, jams and syrups category was the lowest at 12%.
Lower consumer demand in the sector is now beginning to impact sales volumes, which should also help to ease prices.
On the other hand, energy and labour costs remain a significant challenge, so the rate of inflation decline may be slow for some time.
Prestige Purchasing CEO Shaun Allen said: “In spite of falling inflation we expect the pressure on margins for operators to increase during 2023. Although the rate of increase will slow, supplier food prices will continue to increase during the year—at a time when consumer demand will be tightening and scope for increased menu pricing will be limited. Operators should take action now to optimise their supply to preserve margin.”
James Ashurst, client director at CGA by NIQ, added: “News of an easing in foodservice price inflation is very welcome after months of historically high numbers. Key indicators point to further respite as the year goes on, but commodity markets and oil prices remain vulnerable to various macro and micro pressures, so there is no room for complacency. With pressure on consumers’ spending continuing, trading conditions will remain very challenging for businesses across the sector.”
