All categories of the Index recorded double-digit inflation, and one—Oils & Fats— remained at unprecedented highs reporting 47% year-on-year. There is some evidence to suggest that the heat may be dissipating in this sector, with month-on-month increases moderating from earlier highs. The Vegetables category of the Index rose nearly 4% month-on-month to register year-on-year inflation of 23%.
However, the major upstream influencers on the price of food, including oil, exchange rates and volatile commodity markets, are now showing some signs of stabilising. The cost of oil fell in November from $93 to $82 per barrel, while Sterling was stable against the Euro and Dollar. Food commodity markets have eased in recent weeks, with the UN’s FAO Food Price Index virtually unchanged compared from October, and month-on-month decreases in the price indices for cereals, dairy and meat almost offsetting increases in vegetable oils and sugar.
Prestige Purchasing CEO Shaun Allen said: “We expect inflation to begin to level off in December, with a gradual decline commencing in the New Year as the impacts of the less challenging upstream influences and year-on-year effects begin to feed through into the Index. Nevertheless, the average monthly increase in prices during 2022 has been 1.7%, so inflation has a long way to fall before prices (rather than inflation) can start to come down.”
James Ashurst, client director at CGA by NielsenIQ, said: “These latest figures cap an exceptionally challenging year for the food supply chain and the hospitality sector. Alongside labour shortages and the cost-of-living crisis, high inflation has placed intense pressure on operators’ margins and made real-terms growth extremely difficult. Businesses across the industry will be holding their breath for respite in 2023.”
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