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Foodservice price inflation falls to lowest point since early 2017

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Foodservice price inflation falls to lowest point since early 2017

Foodservice price inflation fell to 2.5% in January, its lowest point since early 2017, the CGA Prestige Foodservice Price Index has revealed.

The fall, from 5.1% in December 2017, has largely been attributed to seasonal trends driven by supply and demand, but it is also an indication that some of the pressures that have beset the industry in the last couple of years could be easing.

January’s figures also bring inflation in the foodservice sector broadly in line with wider levels of UK inflation.

The index identified a relaxation in key categories including bread and cheese (2.3%), milk, as well as cheese and eggs (0.2%). Fish prices have fallen by 2.6% year-on-year after months of high inflation.

Troughs in inflation are predicted at the start of a year, CGA has said, but those seen this year are sharper than expected indicating a degree of price correction.

Despite positive signs a number of inflationary challenges lie in wait for the sector including the impact of Brexit, uncertainty surrounding oil prices, trade tariffs and the UK meat industry, which has been hit by the Russell Hume scandal.

The introduction of the sugar tax and last week’s wintry weather could also have an impact.

CGA client director of food Fiona Speakman said: “The CGA Prestige Foodservice Price Index has identified significant volatility in prices over the last couple of years, and there are few signs of it settling down as we move further into 2018.

“January’s headline inflation rate of 2.5% will be welcomed by the industry, and it is a relief to see foodservice come into line with CPI inflation. But it should be remembered that some of the pressures pushing down inflation are seasonal, and with factors like Brexit still causing uncertainty, businesses will have to monitor price trends and purchasing very closely throughout 2018.”

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 per month.

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