Food and drink demand ‘likely to peak again in September’

By Nikkie Thatcher contact

- Last updated on GMT

Supply problems: a multitude of issues have hit the food supply chain of late including HGV driver shortages and Brexit (image: Getty/Taiyou Nomachi)
Supply problems: a multitude of issues have hit the food supply chain of late including HGV driver shortages and Brexit (image: Getty/Taiyou Nomachi)

Related tags: Food, Cga, Inflation, Finance

The issues around food and drink supply after pubs reopened and warm weather are likely to increase again with demand predicted to rise in September, when schools and businesses push up order levels.

The CGA Prestige Foodservice Price Index ​found food inflation stood at 1.6% in June, having levelled off at a time of year it usually falls.

Non-alcoholic drinks increased month on month but are staying below the 2020 levels. The remaining months of this year are likely to see further rises in the level of food inflation as sector demand returns to similar levels seen pre-pandemic alongside extra supply costs and wage inflation feeding into price increases.

Problems compounded

The report found June saw particular supply issues in the south of England, before problems were compounded by a shortage of labour – particularly HGV drivers as well as insufficient manufactured stocks and Brexit-related challenges with imported goods.

As the month continued, many suppliers mitigated issues by refusing orders to cap demand alongside improvements to wages and conditions to attract new employees.

While the situation has now stabilised, the report predicted demand is likely to peak again in early September, once schools return and businesses increase orders.

Unwelcome realisation

Prestige Purchasing CEO Shaun Allen said: “June brought an unwelcome realisation to operators and suppliers alike that availability of labour will be a challenge for the foreseeable future.

“The difficulties with HGV drivers​ has been particularly impactful and operators should consult carefully with suppliers to ensure supply chains are as lean and efficient as possible.”

The foodservice sector has had a long journey so far and the recent disruption to supply has come at the worst possible time, CGA client director James Ashurst.

He added: “Labour shortages and price inflation are unwelcome challenges as consumer demand continues to increase and fragile businesses must hope conditions start to ease in the next few months.”

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