According to the latest CGA Prestige Foodservice Price Index (FPI) the underlying global economic factors and domestic policy changes present more challenges going forward.
It revealed there has been some stability in foodservice over the past 12 months, with the latest figures showing February year-on-year inflation holding steady at 1.8%, while month-on-month inflation saw a slight decrease of 0.1%.
However, the FPI predicted that the rise in labour costs would start to filter through the supply chain, adding further upward pressure to food and beverage pricing as producers and wholesalers adjust to increased overheads.
Volatility
This, coupled with existing pressures on food production costs, suggests that while the current inflation rate is subdued, businesses should remain vigilant for future price increases.
In addition, the FPI found that the highest year-on-year inflation was in oils and fats at 5.7% and coffee, tea & cocoa at 6.8%.
While meat and poultry prices were highlighted as being under significant upward pressure with beef prices continuing to trade at record highs and price rises in chicken being seen due to the Avian Flu outbreak in Poland.
The impact of recently imposed US tariffs remains a concern, it said, and it predicted volatility in the market as some imports and exports to and from the United States start to seek alternative markets.
Resurgence of inflation
Prestige Purchasing CEO Shaun Allen said: “While the overall Foodservice Price Index indicates inflation has been tracking at a relatively low level to date, the upward price pressure on key commodities like beef, chicken, dairy and coffee combined with the impacts from the National Minimum Wage and National Insurance Contribution changes which come into effect in April, means we are likely to see a resurgence of inflation in the coming months.”
Allen advised operators to ensure they have robust procurement strategies and mitigation plans in place where possible to navigate the challenges ahead.
CGA by NIQ senior insight consultant Reuben Pullan warned while increases in national insurance contributions will hit hospitality operators’ margins and are also likely to drive up some prices, tariff wars will inevitably cause more “collateral damage” across the sector.
He added: “Confidence among both consumers and leaders remains hesitant, and businesses will need to stay laser focused on cost management and margins in the months ahead.”
