Food and drink price inflation forecast to continue to rise for up to six months

18 February 2022 by
Food and drink price inflation forecast to continue to rise for up to six months

Food and drink price inflation reached 3.5% in December, with further increases to be expected over the coming months, according to the latest CGA Prestige Foodservice Price Index.

The report forecasts that prices will continue to rise over the next three to six months, with increases being driven by the impact of Covid-19 on production, issues with international shipping and spiralling energy and petrol prices.

The crisis in Ukraine may also drive gas costs to new highs and disrupt the wheat market.

Even if the situation in Ukraine remains calm, CGA said economists predict the overall Consumer Price Index could rise to 8% during 2022, and a similar increase is expected for food.

However, the report said the current spike in inflation will only be temporary, with shipping container prices expected to fall by this summer and food production stabilising as the vaccine programme rolls out worldwide.

James Ashurst, client director at CGA, said: "As the out-of-home food and drink market recovers from two years of Covid disruption, high inflation is the last thing it needs. With consumers' spending increasingly squeezed by rising costs as well, sales and profits are going to be under strain for at least the next few months.

"Businesses will have to work hard to mitigate the effects of inflation, and hope for an easing of pressures as 2022 goes on."

Hospitality businesses have told The Caterer they are having to raise menu prices by around £10-£15 a head to combat costs, with one chef warning customers could face a "shock" in April when increases in VAT and the National Minimum Wage come into force.

Image: Kondor83 / Shutterstock

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