Foodservice price inflation under threat after November prices rise

While year-on-year inflation fell to 2%, the 17th consecutive period of decline, November brought a return to month-on-month inflation with a 0.3% increase in prices, the Foodservice Price Index (FPI) from Prestige Purchasing and CGA by NIQ revealed. 

This, combined with the potential impacts of the Autumn Budget, raises worries about the stability of prices in 2025 and suggests the recent downward pressure on prices may be easing. 

Only two of the Index’s 10 categories recorded month-on-month deflation in November. Coffee, tea and cocoa (6.5%) and mineral water, soft drinks and juices (5.6%) showed the highest year-on-year inflation, while fish (-0.7%) remained the only category with year-on-year deflation.

The index estimates that measures in the Autumn Budget may add 2.3% to current inflation forecasts. Alongside month-on-month inflation and the ongoing effects of high costs on consumers’ confidence, it is likely to “deepen” challenges for the sector this year.

At the same time, the FAO Food Price Index remained at 127.5 points in November, its highest value since April 2023, driven by continued increases in dairy and vegetable oil prices. The US dollar continued to strengthen against sterling, while the Euro remained “relatively stable”. 

Shaun Allen, Prestige Purchasing CEO, said: “The November FPI report could signal a turning point in the inflationary trend. The return to month-on-month inflation, coupled with the anticipated impact of the Autumn Budget and persistent volatility in certain categories, necessitates a heightened level of vigilance. 

“Operators must proactively monitor market developments, adapt their procurement strategies, and explore innovative solutions to mitigate the risks posed by these emerging challenges.”

Reuben Pullan, senior insight consultant at CGA by NIQ, added: “After a welcome period of relief on inflation, the prospect of renewed increases to food and drink prices is alarming for hospitality businesses and consumers alike. While the sector will be hoping that some of the upward pressures relent, it’s clear that the trading environment is going to remain difficult for some time to come. 

“Hospitality can power the UK’s economic growth this year but the Budget’s addition of new costs on top of the uptick in foodservice prices is a serious dent to investment and job creation.”