While overall year-on-year inflation remains relatively low, the latest data presents a nuanced picture. The Oils & Fats category continues to be the most inflationary category, with a significant +5.8% increase compared to March 2024. Sugar, Jams, Syrups and Chocolate also remain subject to inflationary pressures, with a +2.4% year-on-year rise—partly due to ongoing volatility in cocoa pricing. However, while many categories in March may be enjoying a continuation of lower inflationary rates, it should not be taken as any assurance that future figures will be immune to the supply shocks that are currently manifesting in the market.
In the produce sector over recent weeks, there has been a deviation from typical seasonal trends. Instead of the usual price reductions as we approach summer, various factors are contributing to price increases on key items. Significant rainfall and flooding in Europe have affected root vegetables, leading to notable surges, particularly in onion prices.
Meanwhile the dairy sector continues to be impacted by challenges in butter and cream production stemming from adverse weather conditions that affected milk quality and volume last year. However, while suppliers are not yet indicating price decreases, the second quarter of this year offers a more optimistic outlook with the anticipation of improved milk volumes.
Meat and poultry markets are also facing headwinds, including a tightening cattle supply, with UK beef production forecast to drop 5% in 2025. This fall in production is significantly influencing prices, and as the summer BBQ season approaches, increased demand for popular cuts is expected to amplify pressures. The chicken market remains volatile due to ongoing avian flu outbreaks in key production regions, causing extended disruptions to supply. While price increases may be nearing their peak, any subsequent decrease is anticipated to be slow. Avian flu also remains a key driver behind elevated egg prices due to reduced flock sizes.
Shaun Allen, CEO of Prestige Purchasing, commented: “While the latest CGA Prestige Foodservice Price Index offered a glimmer of hope in March, the persistent pressures in key areas like oils and fats, coupled with emerging challenges in produce, dairy, and particularly meat and poultry, underscore the continued need for strategic supply chain management within the hospitality sector. Navigating these complexities will be crucial for businesses looking to maintain margins in the coming months.”
Reuben Pullan, senior insight consultant at CGA by NIQ, said: “March’s uptick in foodservice price inflation, albeit marginal, is more unwelcome news for hospitality businesses in an extremely challenging environment. Alongside an increase in labour costs from April, it adds to heavy pressure on menu pricing and margins. Underlying demand for hospitality remains strong, but all suppliers and operators will be hoping for calmer waters in pricing as we move towards the crucial summer months.”
The exclusive Foodservice Price Index is jointly produced by Prestige Purchasing and CGA by NIQ, using foodservice data drawn from 10.7m 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. For further information, contact Prestige Purchasing on 01908 222678 or stuart.read@prestige-purchasing.com.
Visit the new Foodservice Price Index Digital Portal. The new online hub gives users on-demand access to accurate pricing data, with an array of features to interpret trends and improve decision-making. Find out more: https://prestige-purchasing.com/foodservice-price-index-fpi/
