The headline rate of inflation held steady at 3.4% last month, the same as April this year, the latest official figures from the Office for National Statistics (ONS) showed.
However, with food and drink prices continuing to put pressure on the sector, industry leaders have warned of stagnant economic growth.
UKHospitality (UKH) chief executive Kate Nicholls told The Morning Advertiser (The MA): “Stubbornly high inflation, combined with stagnant economic growth, means the risk of stagflation is beginning to be realised.
“This is detrimental to the entire economy and consumer confidence, so the Government needs to support businesses, particularly those in the hospitality sector, which has proved time and time again it can drive growth under the right circumstances.
Boost growth
“This must be focused around reducing the cost of doing business, which is critical to give our sector the much-needed headroom to invest, support employment and boost growth.
“We need an urgent review and revision of the recent changes to employer National Insurance Contributions.
“In addition, the Government must offer the maximum discount to hospitality businesses as part of its business rates reform, including exempting any affected business from the surcharge.”
Food prices made some of the largest upward contributions to the rate, rising 4.4% during the 12-month period, and partially offsetting downward contributions from other divisions such as transport.
It marked the highest figure recorded for the segment since February 2024, when the rate was 5%.
Regulatory costs
This comes as figures from the CGA Prestige Foodservice Price Index last week revealed inflation within the foodservice sector jumped 2.3% in the year to April 2025.
Meanwhile separate estimates from CGA by NIQ’s Daily Drinks Tracker recently showed drinks sales have continued to be dampened by wet weather.
British Beer & Pub Association (BBPA) CEO Emma McClarkin told The MA: “These figures shows that food and drink inflation remains well above headline inflation and that the cost of doing business is still far too high for brewers and pubs.
“There are a range of regulatory costs which the Government can act to reduce, including Europe’s highest recycling charges, as well urgently looking at ways to cut beer tax and reform business rates at the Autumn budget.”
