Food prices in many markets remain highly unstable in the lead up to Brexit despite a reduction in food and drink inflation during 2018.
That’s according to the CGA Prestige Foodservice Price Index annual report, which said that lower catch quotas and strong demand for cod and haddock has led to a price rises of more than 25% in the fish and seafood category, while oils and fats increased by more than 30% as higher butter prices have filtered through.
Sugar was the only market to see consistent falls in price driven by higher global production in a market with flat demand. On the full basket of the latest goods, average inflation in 2018 stood at 3.3%.
Shaun Allen, chief executive of Prestige Purchasing, said: “Many commentators predicted much lower inflation this year because of the much higher base created in 2017, when inflation was 6.1% following the Brexit-generated falls in the value of Sterling.
“But prices have continued their inexorable climb, and this pattern may well continue, perhaps sharply, as we progress through Brexit in the months ahead.”
Food price instability will be sharpened in the case of a no deal departure from the EU due to the likelihood of the value of Sterling falling by up to 20%, shortages of fresh product for an unpredictable period, and the possibility of new trade tariffs with the EU.
David Read, chairman of Prestige Purchasing, explained: “In the event of no-deal the outcomes are not in our own hands as a nation. For example, if the French were to erect a Customs post in Calais in April this would likely cause severe disruption to freight traffic going in both directions.
“And while the imposition of trade tariffs on imported goods might be ignored by our government, WTO rules would oblige the EU to impose tariffs on our food exports, which would severely curtail export demand in some categories.”