Foodservice prices rise 5% in April and inflation ‘likely to intensify’

Food basket prices jumped in April to bring months of benign inflation to an abrupt end, the latest edition of the CGA Prestige Foodservice Price Index reports.

April’s month-on-month price increase of 5.3% reverses a trend of falling foodservice prices that began in September 2020. It follows warnings from the British Retail Consortium of rising food inflation due to shipping costs, additional border checks and high commodity prices. The UN Food and Agriculture Organisation's Food Price Index has meanwhile reported a 39.7% year-on-year increase in global food prices.

The new edition of the CGA Prestige Foodservice Price Index reports falls in only three of its 10 categories, with significant month-on-month increases in meat, fish, vegetables and oils and fats. It predicts food price inflation is likely to intensify in the coming months, due to factors including renewed restocking demand, production and distribution challenges and Brexit-related costs.

Shaun Allen, chief executive of Prestige Purchasing, said: “We have been predicting the return of food price inflation for some time, and the April Index confirms that the upwards trend is now in motion and is likely to continue. Among many competing pressures operators must focus extra attention on the management of their supply chain now if serious margin damage is to be avoided.”

Leonie-Jade Leigh, client manager at CGA, said: “Signs of inflation are unwelcome at a time when the hospitality sector is just beginning the long road to recovery from Covid. International economic issues and micro supply and demand problems will pile more pressure on businesses that are already battling a wide range of challenges, and they will need to closely monitor inflation and find ways to mitigate it through the rest of 2021.”

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