The inflationary spike followed an easing of prices in May, highlighting a “complex and challenging environment”, according to the Index.
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Rather than isolated fluctuations, June’s data revealed broad month-on-month increases across nearly all food and beverage categories.
The biggest shocks were felt in areas highly exposed to structural constraints and climate volatility.
Fish and seafood saw a massive monthly surge, driven by strict quota restrictions across North Atlantic whitefish fisheries and unyielding biological challenges constraining farmed salmon output.
There was also significant upward movement in the meat and poultry sector, as tight cattle availability and resilient global demand restricted supply.
Extreme weather
Vegetables and dairy also recorded notable month-on-month increases last month, after extreme heatwaves in Europe put stress on water-intensive crops and reduced milk yields.
Meanwhile, the coffee, tea and cocoa category continued on an inflationary trajectory, after adverse weather and structural plantation issues in Brazil, Vietnam and West Africa.
Prices continued to rise despite improving global economic conditions, particularly lower crude oil prices.
According to the Index, these savings have not yet filtered through to manufacturing, packaging and transport costs in the UK wholesale market.
Instead, climate-related disruptions have pushed prices higher, offsetting the benefits of cheaper fuel.
Commenting on the figures, Prestige Purchasing CEO Shaun Allen said: “The 1.8% month-on-month spike in June is a stark reminder of how fragile the food supply chain remains.
Significant disconnect
“We are currently witnessing a significant disconnect in the market; global oil prices have fallen, yet UK operators are facing continued cost increases across both fresh and manufactured categories.
“This paradox clearly demonstrates that structural supply deficits, such as fish quotas and cattle shortages, combined with the immediate impacts of European heatwaves, are overpowering the benefits of cheaper energy. The protective buffer of forward contracts is being severely tested.
“Operators must look beyond headline energy prices and focus their procurement strategies on mitigating climate and structural risks, which will undoubtedly dictate market pricing as we move through the second half of the year.”
Meanwhile, NIQ senior insight consultant Reuben Pullan warned rising food and drink prices added to cost pressures across the supply chain and further weakened business and consumer confidence.
“Macro challenges like extreme weather and conflict in the Middle East are fusing with micro supply issues to make procurement extremely challenging,” Pullan continued.
“With little sign of respite in the coming months. With the arrival of a new Prime Minister, now is the moment for targeted intervention to ease conditions for hospitality.”
