Foodservice inflation eased in November 2017

By Nikkie Sutton

- Last updated on GMT

Tumble time: meat prices fell by 2.8% in November
Tumble time: meat prices fell by 2.8% in November

Related tags: Foodservice price inflation, Foodservice price index, Consumer price index, Inflation

Wholesale foodservice price inflation fell for the third month in a row, easing to 3.4% in November last year, according to research.

The new edition of the CGA Prestige Foodservice Price Index found that prices had fallen to their lowest point since January 2017.

For the first time since the index data was introduced, the figure dipped to below the level of inflation recorded by the Consumer Price Index (CPI), which showed general inflation running at 4%.

Supply challenges

However, supply challenges have kept year-on-year inflation up in other categories such as fruit and ambient hot beverages like tea.

Due to categories being heavily reliant on imports, these have been hit hard by the weakness of sterling in 2017.

Concerns about Brexit and the impact of factors including the La Niña weather phenomenon – the direct opposite of El Niño, when sea surface temperatures in the central Pacific Ocean drop to lower than normal levels.

This is in addition to the Government’s new sugar tax, which also dampens down any confidence about prospects for foodservice prices in the coming 12 months.

Prestige Purchasing head of consulting and insight Christopher Clare said: “As we head in to the new year, it is encouraging to see inflation in foodservice dropping below CPI, however our prices are still 5% higher than CPI when compared to 2015."

Other factors

He added: “The potential impacts of La Niña could still have a significant influence, but we remain cautiously optimistic around the macro-economic outlook.”

CGA commercial director Graeme Loudon added that the ease in inflation meant a mixed bag for the trade.

He said: “The Foodservice Price Index’s finding that inflation dropped to 3.4% in November is positive news for the sector as 2018 opens.

“After a year of relentlessly high levels of inflation, businesses will be relieved to see it dip below CPI and the easing of pressures in meat, sugar, fish and dairy categories is especially welcome.

“However, any optimism that stability is returning will have to be tempered by several factors – not least the doubts about the country’s transition from the EU and the value of sterling.”

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