The latest Foodservice Price Index (FPI) report from Prestige Purchasing and CGA by NIQ reveals more progress in the fight against inflation in the hospitality sector, with rates dropping to 3.1% in July.
It means inflation has now fallen for 13 consecutive months, bringing respite to businesses and consumers who have faced historically high prices across food and drink. However, the report also indicates a slight uptick in month-on-month prices, with the whole basket of items increasing by 0.2% from June. The rise was largely driven by the beverage categories of the Foodservice Price Index, which have consistently risen since March this year, contributing to year-on-year inflation of 7.3% in the Mineral Waters, Soft Drinks & Juices segment, and 4.7% in the Tea, Coffee & Cocoa category.
On the food side, two of the Index’s eight categories recorded a year-on-year decrease in July, with Dairy and Oils & Fats down by -0.1% and -1.7% respectively. In contrast, the Vegetables and Sugar, Jam, Syrups & Chocolate categories saw sharp rises of 9.6% and 8.4% respectively.
High inflation in the Vegetables category is predominantly driven by potato pricing. Reports suggest that English white potatoes are currently up around 90% year-on-year as a result of 2023’s challenging harvest. However, if the 2024 harvest progresses without climatic interruptions, price spikes are unlikely to repeat.
Shaun Allen, Prestige Purchasing CEO, commented:
“The sustained year-on-year decline in foodservice inflation is encouraging, but the slight month-on-month increase and the significant inflation in certain categories, particularly beverages and vegetables, remind us that the journey towards price stability is ongoing. Operators should remain vigilant and proactively manage their procurement strategies to navigate the fluctuating market conditions.”
Reuben Pullan, senior insight consultant at CGA by NIQ, said:
“After two years of relentless price rises, this further drop in inflation brings more relief to hospitality venues and consumers alike. With energy costs easing too, the tight squeeze on operators’ margins and people’s spending may finally be loosening. However, while businesses can now plan with greater certainty, macroeconomic challenges and pressures in key areas of food and drink mean there is no room for complacency.”
