Food prices rise by 1.2%, further increases predicted into 2022

19-Oct-2021 - Last updated on 19-Oct-2021 at 08:11 GMT

Increased demand: poor harvests in some parts of the world have contributed to price hikes (credit: Getty/ollo)

Food prices were pushed up by 1.2% in August and further increases are likely in the coming months, according to the latest CGA Prestige Foodservice Price Index.

The report stated severe labour shortages in the hospitality sector – particularly HGV drivers, pickers and manufacturing and production staff – coupled with increased demand has led to the rises.

UK job vacancies hit a record high in third quarter of 2021, and foodservice has been the hardest-hit sector with almost six vacancies for every 100 employees, the report from sector insight group CGA and procurement and supply chain specialist Prestige Purchasing found.

Post-Brexit import difficulties

It added the labour crisis has led to insufficient manufactured stocks, with problems compounded by post-Brexit difficulties in the imports of goods. Poor harvests abroad and packaging shortages has also had an impact on supply chains.

August was the first full month of restriction-free trading for UK hospitality businesses since March 2020 and saw a sustained return of customers to pubs, bars and restaurant, which increased demand and therefore fuelled price inflation.

The report stated as staff, logistics and import costs continue to rise, it predicted continued inflation over the remainder of 2021 and well into 2022, with the rate of rises likely to increase sharply in the short term.

Supply chain control

Prestige Purchasing chief executive Shaun Allen said: “With Christmas approaching fast, it is essential operators are well in control of their supply chains in advance of what will be a bumpy period for both cost and availability of product. Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year.”

CGA client manager Andy Hodgson added: “Hospitality is making a robust recovery from the Covid crisis, but these inflation figures threaten to stall the momentum that businesses have achieved. While consumer demand remains strong, the likelihood of steeper inflation puts already vulnerable businesses under renewed pressure and reinforces the case for sustained support from government on tax, labour, supply chain and many more issues.”