Food price inflation drops but remains above 20%

The CGA Prestige Foodservice Price Index showed price hikes slowed in foodservice and supermarkets in recent months.

However, the rate of easing has been faster in retail with month-on-month inflation in supermarkets as measured by the consumer prices index stood at 0.3% for August – against 0.8% in the Foodservice Price Index.

It also found all 11 categories remained in double-digit inflation though some saw prices decrease month on month such as fish, fruit and sugars.

Import costs

Meat prices rose again by 1.7% while vegetables recorded the highest year-on-year inflation of any category at around a third (33.5%).

The high cost of transport and packaging following a rise in crude oil prices of 30% above the levels in June is fuelling inflation.

Meanwhile, import costs remain a problem after sterling dropped a little against the dollar and Euro in August and wage inflation of 8% drove costs up further.

Inflationary pressure outweighed a 2.1% decrease in the price of key food commodities in August that was recorded by the UN FAO Food Commodity Index.

Deflation unlikely until 2025

Prestige Purchasing CEO Shaun Allen said: “The outlook for kitchen-door food prices is becoming more positive because inflation will continue to ease but we expect this slowing of inflation to take effect more slowly than in retail.

“A fall in prices (deflation) on the full basket of food and drink is unlikely until at least early 2025.”

Drops in inflation over the summer were welcome, said CGA by NIQ client director James Ashurst but he outlined they had been modest and foodservice prices remain under huge, particularly when compared to slower rates in retail.

He added: “Frustratingly, meaningful relief is still some way off and price will continue to be a major factor in trading conditions in hospitality as we move into the final quarter of 2023.”