Inflationary pressures continue to hit F&B supply chain

New statistics from the CGA Prestige Foodservice Price Index for April show that a basket of goods rose by 2.3% year-on-year and by 0.6% month-on-month.

The report pointed to a number of volatilities causing the sustained price hikes for foodservice, including persistent supply chain disruptions, escalating energy costs and the significant impact of adverse weather conditions.

Some categories have been hit harder than others, with meat and poultry being impacted by the strong demand for beef and ongoing challenges in poultry production.

The oils and fats category has also continued to rise, influenced by high demand for soy and rapeseed oils, while the mineral water, soft drinks and juices sector also saw higher levels of year-on-year inflation.

Fish, meanwhile, showed a modest year-on-year growth of 0.4%, but recorded a sharp 2% rise month-on-month thanks to severe declines in hake stocks and significant quota reductions for cod in key fishing grounds, which are expected to lead to sustained high prices and a shift towards alternative white fish species.

Meanwhile, the dry weather this spring has started to impact root vegetable yields indicating price rises for this category could be felt later in the season, following an annual increase of 0.6%.

Shaun Allen, CEO of Prestige Purchasing, said: “The April data underscores the complex landscape our hospitality clients are navigating. While we’ve seen some seasonal variations, the underlying inflationary drivers remain firmly in place. Categories such as meats, oils and fats and soft drinks are experiencing higher levels of inflation year-on-year, whilst critical staples like fish are seeing sharp month-on-month increases, driven by concerning stock declines and quota reductions.

“Whilst inflation has remained relatively low over the past 12 months, we are now seeing upward pressure coming through in a number of categories and it is important for operators to mitigate these impacts through strategic procurement and supply chain optimisation.”

Reuben Pullan, senior insight consultant at CGA by NIQ, said: “News of an uptick in key food and beverage costs in April is another unwelcome development for hospitality operators and their suppliers. Alongside a sharp increase in labour costs from April, it ratchets up the pressure on both profit margins and menu prices for consumers.

“Warmer weather has boosted trading in pubs in particular over the late Spring, but better government support is urgently needed to help the sector sustain investment and protect jobs.”