Food and DrinkHospitalityNews

“Unsustainable” Food Costs Remain Despite Slight Inflation Fall

The soaring cost of food continues to create significant issues for the hospitality and licensed on trade sector despite a slight easing in the rate of inflation.

Figures released by the Office for National statistics (ONS) have revealed that inflation, particularly the cost of food and non-alcoholic drinks rising at fastest rate in over 45 years.

The annual inflation rate in this category was 19.2%, up from 18.2% in the year to February 2023. Indicative modelled estimates suggest that the rate would have last been higher in August 1977, when it was estimated to be 21.9%.

The largest contributor to the rise in food inflation was bread and cereals, for which average prices rose by 19.4% in the year to March 2023.

Prices are also rising in restaurants and cafés, where the annual inflation rate was 10.4% in the year to March 2023, although that was down slightly from 11.4% in February 2023.

UKHospitality Chief Executive Kate Nicholls said:
“It’s becoming increasingly concerning that we’re not seeing inflation decrease as quickly as many hoped, particularly when business costs are experiencing inflation far higher than the 10.1% released by the Office for National Statistics today.

“We saw just last week that food service price inflation remains over 20% and new research shows that the price pubs paid for food rose three times quicker than their menu prices.

“Hospitality businesses are doing all they can to shield consumers from price rises, which means they’ve absorbed as much cost as they can, but that is becoming unsustainable for many.

“Our sector can help the Government achieve its aims of halving inflation, if it is given a helping hand by the Government to ease recruitment challenges and energy suppliers are reigned in so energy costs are able to fall. I would strongly urge it to do so and harness the power of hospitality to create employment and economic growth, and reduce inflation.”