The analysis by CGA and Prestige Purchasing forecasted further rises in inflation during 2022, and the rate was unlikely to fall below 7% until at least 2023.
Inflationary pressures have been exacerbated in recent months by Russia’s invasion of Ukraine. The crisis has reduced the production levels of food staples like grains and oils, and has driven up energy and fuel costs by increasing oil prices and restricting gas suppliers.
Unstable supply chains
Nine of the 10 food and drink categories measured by the Foodservice Price Index recorded inflation in April 2022 – seven of them reaching double-digits, and three exceeding 20%.
Prestige Purchasing chief executive Shaun Allen said: “The food and drink system continues to be in a high level of instability, with complex impacts upon both cost and availability of product.
“Simply acceding to price increases will not be an acceptable option for many operators, so actively managing supply increases using reliable market data is essential. This is also a good time to review menu and ingredient ranges, and supply models to ensure optimum margin in the months ahead.”
Extremely challenging outlook
Areas of particular volatility included grains, with the war in Ukraine damaging production and preventing transportation, with the availability of edible oils also hit by the war.
Other areas of volatility include poultry as Avian flu has reduced capacity, and feed and fuel costs have risen sharply, dairy as reduced milk production has raised prices, and fish, with salmon at its highest ever prices and UK fresh fish impacted by frozen white fish price rises.
CGA client director James Ashurst believed soaring prices were starting to affect consumers’ spending and on top of global supply issues and Brexit, the outlook for the rest of the year was “extremely challenging”.