Food inflation hits record high of 24%

25 January 2023 by
Food inflation hits record high of 24%

December 2022 marked the 11th consecutive month of double-digit inflation after a year of intense inflationary pressures for foodservice businesses.

The Foodservice Price Index (FPI) full basket including beverages ended at 22.9%, while year-on-year inflation excluding beverages was even higher at 24%, according to CGA Prestige

All 10 categories of the index recorded inflation of at least 10% in December, with more than half topping 20%. The oils and fats category led the surge, with year-on-year inflation surging to a high of 47%.

For 2023, CGA and Prestige said there were "mixed signals" from supply markets on future pricing. Oil and exchange rates, the two leading upstream influencers on food prices, were described as "more benign" than during most of 2022, and the UN's Food and Agriculture Organization Food Price Index fell by 1.9% in December 2022, a ninth consecutive month of decline, to take it to 1% below its value a year ago.

However, inflationary influences were highlighted including energy costs, which continue to be high, and reduced government support, as well as higher labour costs across supply chains showing "few signs of relief". With a significant easing in prices only likely to begin with an end to conflict in Ukraine, the outlook for 2023 therefore remained volatile, said CGA and Prestige.

Prestige Purchasing chief executive Shaun Allen said: "The next step on our inflation journey will be when the current 2% to 4% month-on-month increases start to slow down. We expect this to start to happen in the months ahead, but we are likely to experience an extended period where prices continue to go up, but just more slowly. These market conditions provide an opportunity for some suppliers to increase prices ahead of market, and buyers should seek hard data to verify and benchmark any increases during 2023."

James Ashurst, client director at CGA by NielsenIQ, said: "Businesses up and down the foodservice supply chain were besieged by inflation in 2022, and as we enter 2023 there is little respite in sight. Alongside the cost of living crisis for consumers, soaring food and drink prices are piling enormous pressures on hospitality, and sustained government support is needed to protect businesses and jobs in this vital sector of the UK economy."

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