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Foodservice price inflation falls for third consecutive month

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Foodservice price inflation falls for third consecutive month

Foodservice price inflation fell for the third month in a row in November 2017 to 3.4% – the lowest since January 2017 and less than the national level of inflation (4%).

The CGA Prestige Foodservice Price Index suggests stability is returning, with experts adding that the progress of Brexit has “restored some confidence to the sector.”

However, the report warns the future of foodservice price inflation in 2018 and beyond is “uncertain.”

In the ten food and beverage categories featured in the index, most have experienced an ease in inflation. Prices dropped by 2.8% within the meat category and 10.6% in the sugar, jam, syrups and confectionery category.

However, for categories including fruit and ambient hot beverages (such as tea) inflation has stayed high due to supply challenges, with imports hit hard by the weak pound.

CGA commercial director Graeme Loudon said: “The Foodservice Price Index’s finding that inflation dropped to 3.4% in November is positive news for the sector as 2018 opens.

“After a year of relentlessly high levels of inflation, businesses will be relieved to see it dip below the Consumer Price Index, and the easing of pressures in meat, sugar, fish and dairy categories is especially welcome.

“However, any optimism that stability is returning will have to be tempered by several factors—not least the doubts about the country’s transition from the EU and the value of Sterling.”

The CGA Prestige Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using data drawn from over 50% of the foodservice market and around 7.8 million transactions a month.

Christopher Clare, head of consulting and insight at Prestige Purchasing, expressed concern about Brexit and the impact of factors including La Niña (sea climate patterns) and the government’s new sugar tax.

He said: “As we head in to the New Year, it is encouraging to see inflation in foodservice dropping below CPI, however, our prices are still 5% higher than CPI when compared to 2015. The potential impacts of La Niña could still have a significant influence, but we remain cautiously optimistic around the macro-economic outlook.”

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