Ingredients prices continue to soar

By Nikkie Thatcher

- Last updated on GMT

Cost rises: a plethora of food categories have seen an increase in prices
Cost rises: a plethora of food categories have seen an increase in prices
Food prices saw month-on-month rises in May, according to the latest edition of the CGA Prestige Foodservice Price Index.

The price increases have triggered a rise in the overall measure to its highest point to date, however, year-on-year inflation is slowly easing and has fallen below 6% for the first time this year, the index revealed.

Price of fruit and vegetables are particularly susceptible to price fluctuations between April and June, as the availability of UK produce is dependent on spring weather.

Prices fall once reliance on imported product declines and availability of home produce has, this year, been later than usual – a factor exaggerated by unfavourable exchange rates.

Last year saw hot and dry conditions throughout Europe in spring, but the weather has been more unsettled in 2019, with more rain and a tendency for extreme events.

One example is a key fruit-growing region in Italy that has suffered from torrential hailstorms that damaged a large amount of soft fruit crops, including peaches and nectarines.

Rising fish prices

Vegetable-growing areas in the UK have also experienced heavy rain and flooding, delaying harvesting and damaging some crops.

Shortages of berry pickers in the UK are taking a toll at a crucial time in harvesting, with reports that three in four picking vacancies are going unfilled.

Fish prices have also risen, after salmon farmers were pressured to sell existing stocks quickly to avoid infection in advance of an algae bloom outbreak.

Now this rush has died down, prices have spiked due to a drop in supply and a lower weight caused by earlier harvesting.

The sugar category reported more optimistic news. Yields from past harvesting and crushing delays caused by undesirable weather in Brazil earlier in the year finally reached the market and meant prices fell.

Alongside this, a surplus stock in crude oil in South American caused sugar cane, which can be used for sugar instead of ethanol, brought sugar prices down further.

Significant impact

Prestige Purchasing CEO Shaun Allen said: “Although inflation has been slowing over the past six months, we are still observing food prices rising due to factors that are affecting almost all categories, including exchange rates, supply market challenges, variable weather conditions and continued Brexit uncertainties.

“In a rising market, it is essential operators are well informed and manage supplier pricing with rigour.”

CGA client director of food Fiona Speakman said there was a distinct contrast in the latest edition of the Foodservice Price Index, between month-on-month price pressures and a welcome slowing of inflation year on year.

She added: “It also makes clear the significant impact of the weather on the prices of key foodservice items and the sharp fluctuations generated by extreme conditions could be a sign of things to come.

“Businesses can’t control the weather of course, but they can adapt their sourcing and buying strategies to mitigate some of its impacts.”

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