Fish prices stabilise month on month in December 2018

New edition of the Foodservice Price Index from CGA and Prestige Purchasing also identifies easing of prices in Oils and Fats but rising inflation in Soft Drinks.
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The Foodservice Price Index has been hovering in the 110 to 115 range since the Spring of last year, and December has continued this trend. Levels of inflation in fish prices are low month-on-month due to good availability of salmon during the seasonal high demand in December, whilst the Sugar, Jam, Syrups & Confectionary category saw a seasonal increase reduced significantly year-on-year because of continued overproduction particularly in India. The soft drinks category, however, has seen a significant rise in year-on-year inflation as it continues to be stimulated by the impact of the sugar tax introduced last year.

Eight of the ten FPI categories are still showing inflation compared to December 2017, with just two of the categories showing price falls during the same period (Sugar and Meat).  However, it is a positive sign that in five categories prices have fallen month-on-month, perhaps demonstrating that prices are starting to ease in some categories.

Inflation in the Fish category (which has been increasing heavily every month for some time) has only seen a slight increase, which has been helped by static salmon prices improved by Scottish and Chilean inventory levels. The index remains high, however, largely due to quota cuts and reduced volumes of white fish such as Cod & Haddock. With the impact of Brexit remaining uncertain and reduced quotas still in place, price movements are likely to continue to be volatile within the Fish category.

Although we’ve seen a high year-on-year increase in the Soft Drinks category, the month on month movement is more stable showing a decrease of 6.8%. The year-on-year rise in inflation is owing in part to the impact from the Sugar tax, premiumisation and strong demand, notably in the mixers market.

The Oils and Fats category appears to be stabilising, though large anticipated reductions in price have yet to feed through. With inflation remaining stable we expect prices to ease with wholesale butter prices being key to this, as they are down by 8% against the same time last year.

We are still seeing the same downward movement within the Sugar category, with year-on-year FPI deflation 4.4% still mainly down to global overproduction. We may, however, start to see prices rise in the coming months due to droughts in South and North Eastern Brazil which are causing problems for sugar cane production. At present, production continues to exceed sugar consumption globally, but world supply could be affected if the dry weather conditions in Brazil continue.

In other categories, inflation in Meat and Poultry is also down against the same time last year, whilst in contrast the Vegetable, Fruit and Dairy categories are all showing year on year inflation.

Shaun Allen, Chief Executive at Prestige Purchasing, said: “Overall inflation remains at a high level in the foodservice market. With the departure date from the EU now less than two months away and the uncertainty of what potential impacts this could have on the food and drink supply chain, we are likely to continue to see high levels of volatility during 2019. It is more important than ever that businesses have strong risk management plans in place to mitigate and manage the future risks to supply and inflation.”

Fiona Speakman, CGA Client Director – Food, said: “Our Foodservice Price Index indicated significant volatility in price inflation for the sector throughout 2018, and there are already ample signs that we can expect more uncertainty in 2019. Businesses across the sector will now be closely watching the impacts of Brexit on foodservice prices, and hoping for a period of calmer inflation as the year goes on.”

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. index-fpi

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