NIQ’s latest Foodservice Price Index revealed food and drink prices in the sector fell by 0.2% month on month in February, signalling continued cost stabilisation after late-2025 inflationary spikes.
Downward movement was driven by easing in major categories including milk, cheese & eggs, where prices fell month-on-month after improved European milk availability and softer demand for cheese.
The oils & fats category also continued to moderate while coffee, tea & cocoa prices were reduced by the unwinding of extreme cocoa price inflation, as global supply expectations and market surpluses rose.
Other categories of the Foodservice Price Index including mineral water, soft drinks & juices and meat & poultry remained broadly flat in February.
Short-term relief
Stable packaging costs and softer global sugar inputs helped to offset significant upward movement in beverage prices, while the meat sector balanced tight domestic beef availability against softer global pork values.
However, short-term relief in inflation was heavily overshadowed by the escalating global geopolitical situation. The closure of the Strait of Hormuz triggered a sharp rise in crude oil prices, causing concern for future inflation.
The sudden spike in energy costs threatens to rapidly drive up costs of manufacturing, packaging and distribution across the entire supply chain, potentially reversing the recent easing of prices recorded by the Index.
More upward pressures remained elsewhere in the basket. Prices in the bread & cereal category rose as global wheat markets reacted to frost damage and winterkill risks across parts of Europe and the US.
Fresh produce also remained challenged, with vegetables ticking up due to crop-transition gaps in key growing regions like Spain and Morocco, while the fish category inflated as strict Barents Sea cod quotas kept whitefish prices at historic highs.
High alert
Prestige Purchasing CEO Shaun Allen said: “A month-on-month drop of 0.2% is a positive signal for the hospitality sector, demonstrating the severe cost pressures in categories like dairy and cooking oils are beginning to ease.
“However, operators must stay on high alert. The escalating geopolitical crisis and the closure of the Strait of Hormuz pose a severe risk to this fragile stability.
“As oil prices surge, the knock-on effects on freight and production costs will be unavoidable. Agile and forward-looking procurement strategies are essential to navigate this impending volatility.”
NIQ senior insight consultant Reuben Pullan added: “After inflationary pressures across the board for hospitality in 2025, the recent easing of food and drink prices has been a rare and welcome cause for optimism.
“However, that optimism is being tempered by heightened geopolitical uncertainty and the knock-on impact of higher energy-driven inputs. For hospitality, this makes it more important than ever to stay close to costs and remain flexible in planning.”
