Geopolitical shocks threaten severe inflation

Operators have been warned not to be lulled into a false sense of security by the deflation recorded in March.

Food and drink prices in the hospitality sector fell by 1.4% month-on-month in March, according to the latest Foodservice Price Index from NIQ and Prestige Purchasing.

But this deflation is likely to represent momentary respite rather than sustained relief, according to the tracker, with the relief largely driven by the delayed transmission of costs in UK supply chains.

The war in the Middle East and continued energy shocks are likely to drive cost increases in the coming months, with conflicts triggering a spike in global crude oil prices which is likely to be felt via high inflation across the foodservice sector.

Shaun Allen, CEO of Prestige Purchasing, said: “While a 1.4% drop in the Index provides some welcome, short-term relief, operators must not be lulled into a false sense of security. We are currently in the eye of the storm. The reality is that global food commodities are rising across the board, and the geopolitical situation in the Near East has sent energy markets into overdrive. The UK supply chain has shown remarkable resilience to absorb these shocks so far, but suppliers cannot hold back this tide indefinitely. Operators should view this temporary dip as a vital, rapidly closing window to lock in contracts and fortify their procurement strategies before these global pressures inevitably break through to the UK market.”

Reuben Pullan, senior insight consultant at NIQ, said: “A softening of food and drink inflation has been a rare bright spot for hospitality in early 2026, but the benefits will almost certainly be short-lived. Oil shocks and geopolitical uncertainty are storing up some seismic shocks in energy-related prices, and businesses and consumers alike will have to steel themselves for yet more price rises as the year goes on. Hospitality remains a dynamic and adaptable industry, but this new wave of inflationary challenges will be another severe test of their resilience.”