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While the pace has slowed from the 1.8% in June, there have been concerns raised about the impact of prolonged heatwaves resulting in uncertainty for buyers in a number of food categories.
These included vegetables, where hot and dry weather has impacted UK crops with broccoli, cauliflowers, potatoes, onions, carrots and parsnips have experienced varying levels of moisture stress, creating uncertainty around future yields and availability, according to the latest Foodservice Price Index from NIQ and Prestige Purchasing.
However, last month brought some positive news for fruit with strong availability of British strawberries, raspberries, blackberries, blueberries, plums and early season apples, resulting in lower fruit prices month-on-month.
Cannot afford complacency
Elsewhere, international grain markets strengthened in July. Wheat prices were up while vegetable oil markets also moved higher.
In contrast, international meat markets weakened for the first time this year with softer poultry, pork and beef prices but strong global demand and limited supplies pushed lamb prices to record levels.
Prestige Purchasing CEO Shaun Allen said: “July’s marginal 0.2% increase feels like the calm before a potential storm.
“With UK drought conditions actively threatening domestic vegetable yields and global grain markets reacting to renewed geopolitical stress in the Black Sea, operators cannot afford to be complacent.
“The transition from summer to autumn will be a critical period for supply availability, making proactive, data-led procurement absolutely essential.”
Significant volatility
While the recent heatwaves are likely to have benefitted the on-trade, the impact of the intense temperatures could have serious effects later in the year, warned NIQ senior insight consultant Reuben Pullan.
He said: “Broadly flat prices in July disguise significant volatility in the foodservice supply chain and buyers face a very uncertain autumn and winter.
“While high temperatures work to the advantage of many hospitality businesses in sales terms, extreme climate issues are likely to have seismic impacts on their operations in the year to come.
“Mitigating inflation is an urgent priority for venues seeking to retain guests and protect margins.”
