Food price inflation in hospitality falling slower than in supermarkets

Food price inflation in hospitality dropped slightly to 21.7% in July compared to the same period last year, according to the CGA Prestige Foodservice Price Index.

Despite this 0.9% drop, inflation remains only just below the index’s previous peak of 22.9% in December 2022.

While foodservice price inflation has fallen year-on-year, it rose 0.7% compared to the previous month. In contrast, food prices in supermarkets dropped 0.4% between June and July.

However, the monitor showed some signs foodservice prices are starting to ease, with the cost of fish falling 0.8% - its first month-on-month drop since July 2022.

Dairy prices remained stable while vegetable prices only increased 1.6% in July, down from 3.2% in June.

Inflation in food prices is taking longer to come down than other areas as the sector is dominated by processed items and manufacturers are exposed to rising energy and labour costs. Many products are also imported and are subject to extra costs from post-Brexit trading arrangements.

Shaun Allen, chief executive of Prestige Purchasing, said: “Food and drink supply into hospitality has been slower to react to falling input costs than the retail sector.

“We are confident that over the remainder of the year inflation will begin to ease at our kitchen doors, but both buyers and suppliers will need to play their part in curbing the continually rising costs that threaten the existence of so many of our sector’s brilliant operators.”

James Ashurst, client director at CGA by NIQ, added: “[With] inflation still topping 20%, trading conditions remain extremely challenging. It is especially frustrating at a time when prices are easing in the retail sector and reinforces the case for targeted government support for hospitality businesses.”