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Steep rise in fish prices and the weak pound are major contributors to higher than average inflation in the latest edition of the CGA Prestige Foodservice Price Index.
Foodservice price inflation reached 6.0% in March 2017, the latest edition of the exclusive CGA Prestige Foodservice Price Index reveals—thanks to a dramatic rise in the price of fish and continued inflation in sugar, meat, cereals, and vegetables.
The headline figure shows that inflation in wholesale foodservice prices is accelerating, following year on year inflation of 1.8% in December, 2.9% in January and 3.7% in February.
There is now a large gap between the Foodservice Price Index and the Consumer Price Index, which changed 1.2% in the 12 months to March.
Prices in the foodservice sector continue to be affected by a host of factors including the weak pound, rising oil prices and lower than usual supply of many items, as well as climatic and regional issues. The inflation rate of 6.0% is substantially up on historical averages, and March prices were higher year on year in all ten sub-categories of the Foodservice Price Index measured by Prestige Purchasing and CGA Strategy.
The most significant inflation in March came in the category of fish, where prices were up by 19.9% on a year previously. It follows a lean start to 2017 for US salmon fishermen, poor cod catches and sea lice problems adding to farming costs. Other notable figures revealed in the latest edition of the CGA Prestige Foodservice Price Index include:
- Sugar, chocolate and other confectionery inflation now over 10%, thanks to lower than usual exports and rising prices from UK beet producers
- Meat and poultry prices up significantly year on year, with the weak value of sterling increasing demand for British products overseas
- Prices now inflationary in the milk, cheese and egg category following the rising farm-gate cost of milk—a notable increase on the deflationary figure for this category a month ago.
There is some respite in inflation in vegetables, where although prices are still notably up year on year, the level of inflation has decreased. As 2017 goes on, growth in British vegetable production should help to push down inflation further. Inflation in some other categories like fruit is meanwhile relatively restrained. But with few other positive pricing trends and sterling set to remain weak during Brexit negotiations, the Foodservice Price Index predicts that inflation will remain well above average over the next few months..
Christopher Clare, Head of Consulting & Insight at Prestige Purchasing, said: “Whilst the inflationary figures regarding fish will no doubt make the headlines this month, the overall level of inflation has really been driven by ‘across the board’ price increases as the real effects of a prolonged depression in the value of sterling take their toll on operators – being informed at times like this is critical.”
Our latest CGA Prestige Foodservice Price Index reveals the scale of inflationary pressures facing the foodservice sector at the moment. The weak pound is causing major headaches for businesses in the supply chain that rely on imports, and various other external factors are adding to the burden. With inflation unlikely to ease soon, foodservice companies will need to adopt smart pricing strategies and stay nimble and flexible in their purchasing in the coming months.
The CGA Prestige Foodservice Price Index is jointly produced by Prestige Purchasing and CGA Strategy, using data drawn from over 50% of the foodservice market and around 7.8m transactions per month. More information on specific categories is available on a subscription basis.
About Prestige Purchasing
Prestige Purchasing is one of the UK’s leading specialists in procurement and supply chain management for the hospitality, catering, leisure, retail and private healthcare sectors.
About CGA Strategy
CGA is the world’s leading business intelligence and strategic consultancy provider for the out of home leisure market; the definitive source of integrated consumer insight and market measurement informing strategies for our clients’ growth. We live, love and breathe our industry, harnessing our passion and knowledge to help the market make smarter and more informed decisions. CGA works closely with consumers, retailers, suppliers, trade bodies and government so that our expert consultants can bring every strategic insight to life.
