Pubs warned of more price rises after inflation surge

By Amelie Maurice-Jones contact

- Last updated on GMT

Mounting pressures: Worries for the sector as inflation surges (Getty/ MariamVejcik)
Mounting pressures: Worries for the sector as inflation surges (Getty/ MariamVejcik)

Related tags: Finance, Inflation, Cga, Coronavirus, Market

Year-on-year inflation in the foodservice sector reached 3.5% in December 2021, the latest edition of the CGA Prestige Foodservice Price Index has revealed.

The report also forecasted further price rises over the next three to six months. Inflation is currently being driven by a combination of Covid impact, lockdowns on food and drink production, ongoing chaos in international shipping, and rising energy and petrol costs. 

Prestige Purchasing chief executive Shaun Allen believed everyone would remember 2022 as the first year of significant inflation for over a decade.  

Coupled with rising costs in other areas such as energy and wages, Allen said the increases would impact margins without both strong management action on procurement, and the rising of prices.  

Crisis upon crisis

Brexit has choked Britain’s labour market, leading to shortages of product, and higher wages. Furthermore, the current crisis in Ukraine may add to disruption by driving gas prices to new high and disturbing the wheat market. 

Even without a war in Ukraine, many economists now expect the overall Consumer Price Index to rise to 8% during 2022, and the CGA Prestige Foodservice Price Index predicted similar levels for food. 

Unlike some inflationary periods in the past, the report anticipated the current spike would be relatively temporary. The shipping crisis is slowly coming to an end, and contained prices are expected to fall by the summer. What’s more, production is gradually stabilising as Covid vaccination programmes are rolled out. 

The last thing we need

CGA client director James Ashurst said: “As the out-of-home food and drink market recovers from two years of Covid disruption, high inflation is the last thing it needs.” 

With consumers’ spending increasingly squeezed by rising costs as well, sales and profits are going to be under strain for the next two months at least. For Ashurst, businesses would have to work hard to mitigate the effects of inflation, and hope for an easing of pressures as 2022 goes on. 

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