CGA and Prestige Purchasing’s Foodservice Price Index (FPI) for March recorded the highest levels of inflation among ingredient prices since the dataset’s beginning four years ago. The FPI revealed that food prices on the whole had risen by 9.8% year on year across the month. Inflation remained high in a number of categories, including fish and fruit.
The Fish category saw much of the increase down to difficulties in the North Sea, where poor weather has kept ships off key fishing grounds for long periods and reduced catches. Fishing vessels have already been limited to lower quotas for cod and haddock over the last year, and recent weather conditions have only compounded the impact, resulting in a high level of inflation against the same time last year.
Inflation in the Fruit category also remained high in this month but is expected to ease as we move into spring and summer and the UK’s reliance on imports reduces. Similarly, dairy commodities, while still up compared to 12 months ago, have also started to fall, and are expected to continue doing so as we head into the peak production season of the spring flush.
The Oils & Fats category of the Index continues to trend downwards and now sits below levels at March 2018. Major food oil commodities are tracking below price levels of last year, helped by strong import volumes into the European Union in recent months. The fall in UK butter prices seen since last October has also contributed to the drop in inflation for this category.
The Meat category of the Index has fallen again this month, as it recovers from the peak of Christmas demand. Pork and lamb prices remain down from this time last year, but demand for certain products, such as bacon, has seen some recent uplifts, with reports of some stockpiling in the lead-up to Brexit.
Fiona Speakman, CGA Client Director – Food, said: “The challenge of inflation in the foodservice sector intensified yet again this month, with prices of important items like fish and fruit running at high levels. Combined with Brexit-related economic uncertainty, patchy consumer confidence and various supply issues, it is making forecasting extremely difficult for operators across the industry. Whatever the eventual outcome of Brexit negotiations, it will be absolutely crucial in the coming months for all firms to stay right on top of both business-side and consumer-side trends and make their purchasing strategies as sharp as possible.”
Shaun Allen, Chief Executive at Prestige Purchasing, said: “Food prices in the sector have been consistently tracking at higher levels for nearly a year, and the latest inflation level of almost 10% this month reflects the extent of how much the supply markets have been impacted compared to the same period last year. However the outlook on inflation is looking more positive for operators, as the Foodservice Price Index has fallen slightly over the past two months, indicating that inflation in the sector looks to have peaked and is forecast to drop back over the coming months, subject still of course that the outcome of Brexit does not lead to major disruption to availability of products from the EU and introduction of WTO tariffs.”