Foodservice Price Index predicts return to inflation

Inflation is starting to return to food and non-alcoholic drinks after months of falling prices, the CGA Prestige Foodservice Price Index has revealed.

March figures from the index showed a firming of prices year-on-year as lockdowns lifted and deflationary pressures related to Brexit receded. It is expected that prices will continue to increase month-on-month as hospitality gradually restores full service and government policy regarding public sector debt, taxation and inflation becomes clearer.

The March edition of the index also showed a return to significant levels of inflation in categories including fruit, meat and breads and cereals. The traditional firming of prices that is seen in the spring season has also contributed to the upward movement.

Shaun Allen, chief executive of Prestige Purchasing, said: “We expect prices to rebound as volumes recover, probably to above 2020 levels as the year progresses. Operators would be well advised to seek price holds from suppliers while current inflation levels remain benign. They should also avoid taking a renewal of pre-lockdown supply for granted, as the commercial impacts of the winter lockdown have been harmful to many supplier balance sheets.”

Andrew Dean, client director for retail at CGA, said: “The return of hospitality is a huge relief for operators, the foodservice sector and consumers alike. However, the sector faces a long road back to profitability, and the signs of inflation will be unwelcome for businesses already facing a host of other challenges. Keeping a close eye on pricing trends and developments and responding nimbly will be crucial to the recovery process over the remainder of 2021.”

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