Inflation in the foodservice sector dropped in March from the record high of 9.8% in February—but while increases are less steep than in 2018, prices are continuing to rise. Market instability and Brexit uncertainty will combine to keep prices increasing in the months ahead, the exclusive Foodservice Price Index from CGA and Prestige Purchasing predicts.
Fish continues to be the most volatile category in terms of price movements. Prices here are well above the levels seen this time last year and rose by 10% month on month. Salmon prices peaked in the run-up to Easter, but with good weather this Spring and reduced demand, along with likely increases in cod and haddock landings, we expect to see some easing in this category.
The Breads & Cereals category of the Index has also risen, and while there is a seasonal trend for price increases at this time of year, poor weather in the US is further firming global prices. Significant winter storms and flooding from snowmelt has resulted in substantial losses of corn, wheat, and barley, and there is the prospect of significant delays to Spring plantings. This means the US may look more to imports, strengthening the grains market as a result.
The largest deflationary movement in March was seen in the Fruit category, where prices fell back substantially. Spanish citrus recently suffered from flooding, resulting in a climb in the Index since December. With buyers now favouring cheaper imported produce from Egypt, Turkey and South Africa, prices are beginning to ease.
CGA client director Fiona Speakman said: “While inflation appears to be slackening a little against the very high levels of recent times, there is still a significant degree of volatility across the sector. The sharp contrast between inflationary categories like Fish and deflationary sectors like Fruit shows that prices are very sensitive to market challenges and dynamics. Businesses will be hoping that general inflation continues to ease, but macro and micro challenges mean there is likely to be more instability ahead.”
Prestige Purchasing chief executive Shaun Allen commented: “Whilst inflation, after a period of unprecedented increase, is now falling, we still remain in a period where each month sees further price increases in most categories. Operators in fixed-term pricing agreements can expect challenging negotiations when they emerge from their protection.”