The CGA Prestige Foodservice Price Index recorded month-on-month price rises in nine out of ten categories in May, triggering a rise in the overall measure to its highest point to date. But year-on-year inflation is slowly easing and has fallen below 6% for the first time this year, the Index reveals.
Fruit and vegetable prices are particularly susceptible to price fluctuations between April and June, as the availability of UK produce is dependent on Spring weather. Prices fall once reliance on imported product declines, and this year’s cutover has been later than usual—a factor exaggerated by unfavourable exchange rates.
In 2018, we experienced hot, dry conditions throughout Europe in the Spring months, but the weather has been more unsettled in 2019, with more rain and a tendency for extreme events. For example, a key fruit growing region in Italy has suffered from torrential hailstorms, damaging a large amount of soft fruit crops including peaches and nectarines. Vegetable growing areas in the UK have also experienced heavy rain and flooding, delaying harvesting and damaging some crops. Shortages of berry pickers in the UK are meanwhile taking a toll at a crucial time in harvesting, with reports that as many as three in four picking vacancies are going unfilled.
Fish prices have also risen after salmon farmers were pressured to sell existing stocks quickly to avoid infection in advance of an algae bloom outbreak. Now that this rush has died down, prices have spiked because of a decrease in supply and a lower weight caused by earlier harvesting.
There is a more positive outlook in the Sugar (Jams, Syrups and Confectionery) category of the Foodservice Price Index. Yields from past harvesting and crushing delays caused by undesirable weather in Brazil earlier in the year finally reached the market and caused prices to fall. Additionally, a surplus stock in crude oil in South America has caused sugar cane to be used for sugar instead of ethanol, bringing sugar prices down further.
Prestige Purchasing CEO Shaun Allen said: “Although inflation has been slowing over the past six months, we are still observing food prices rising due to factors which are affecting almost all categories including exchange rates, supply market challenges, variable weather conditions and continued Brexit uncertainties. In a rising market it is essential that operators are well informed and manage supplier pricing with rigour.”
CGA Client Director of Food Fiona Speakman said: “There is a distinct contrast in the latest edition of the Foodservice Price Index, between month-on-month price pressures and a welcome slowing of inflation year-on-year. It also makes clear the significant impact of the weather on the prices of key foodservice items, and the sharp fluctuations generated by extreme conditions could be a sign of things to come. Businesses can’t control the weather of course, but they can adapt their sourcing and buying strategies to mitigate some of its impacts.”
The exclusive Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using foodservice data drawn from 7.8m transactions per month. It contains myriad insights and information pertinent to the foodservice sector and is essential reading for anyone seeking to keep ahead of price trends and understand why they occur. More information on specific categories is available on a subscription basis. https://www.prestige-purchasing.com/services/foodservice-price-index-fpi