However, operators were warned this is likely to be momentary respite as cost increases in the coming months are likely due to conflicts and energy shocks.
According to the latest Foodservice Price Index from NIQ and Prestige Purchasing, March’s deflation was largely driven by the delayed transmission of costs in UK supply chains.
Conflict has meant a big spike in crude oil prices, which is expected to drive inflation up across foodservice with high oil prices increasing freight, packaging, agricultural inputs and energy-intensive manufacturing costs.
Eye of the storm
Prestige Purchasing CEO Shaun Allen said: “While a 1.4% drop in the index provides some welcome, short-term relief, operators must not be lulled into a false sense of security.
“We are currently in the eye of the storm. The reality is that global food commodities are rising across the board and the geopolitical situation in the Near East has sent energy markets into overdrive.
“The UK supply chain has shown remarkable resilience to absorb these shocks so far but suppliers cannot hold back this tide indefinitely.
“Operators should view this temporary dip as a vital, rapidly closing window to lock in contracts and fortify their procurement strategies before these global pressures inevitably break through to the UK market.”
Seismic shocks
While the softening of food and drink inflation has been a rare bright spot for the sector, the benefits are likely to be short-lived, said NIQ senior insight consultant Reuben Pullan.
“Oil shocks and geopolitical uncertainty are storing up some seismic shocks in energy-related prices and businesses and consumers alike will have to steel themselves for yet more price rises as the year goes on,” he added.
“Hospitality remains a dynamic and adaptable industry but this new wave of inflationary challenges will be another severe test of their resilience.”
This came after the index found foodservice inflation in February also fell but at the time, it warned heightened geopolitical uncertainty threatened to prolong the pressure for hospitality firms.
