Operators advised to lock in food prices as inflation falls

Operators are being advised to lock in purchasing savings after year-on-year food inflation fell to half the 12-month average in December 2019.

A good harvest of potatoes and onions has helped bring down the price of vegetables, while the price of dairy also fell, according to the Foodservice Price Index from CGA and Prestige Purchasing.

It found that seven out of 10 categories saw unseasonal month-on-month drops in inflation, while inflation across all food types dropped for the sixth month in a row.

However, the report warned that prices could be impacted by a spike in packaging costs caused by oil-producing countries cutting production to mitigate the impact of Covid-19 (coronavirus).

Prestige Purchasing chief executive Shaun Allen advised that these unseasonable savings may just be temporary, so operators should look to lock them into deals now.

He added: "Now is an excellent time for operators to be looking at their pricing, and taking steps to ensure that it reflects the wider market. It is very possible that this a temporary respite and we will see the index begin to rise again in the second quarter."

CGA client director Fiona Speakman added: "Christmas demand usually delivers an increase in food and drink price inflation, so the easing of pressures across the price index is good news. Foodservice businesses have been battling many inflationary pressures since the Brexit referendum in 2016, but will now be hopeful that prices are settling."