Volatile food and drink categories fuelling foodservice inflation

Volatile food and drink categories fuelling foodservice inflation
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Volatility in key food and drink categories, such as soft drinks and fish, is fuelling inflation in the foodservice supply chain, according to the latest edition of the CGA Prestige Foodservice Price Index.

The report, jointly produced by Prestige Purchasing and CGA, reveals that soft drinks prices were 11.1% higher in May 2018 than 12 months previously.

Inflation has been triggered by the introduction of the government’s sugar tax and a shortage of food-standard carbon dioxide, a key component of carbonated drinks.

The Index, meanwhile, reveals fish prices to be at record highs, with year-on-year inflation hitting 23.8% in May. The upward trend has been fuelled by spiralling salmon prices in particular, and by uncertainty over future fishing quotas.

It also highlights concerns over future inflation in meat, in the wake of rising tariffs in key territories and significant supply problems in Brazil, the world’s largest poultry exporter.

Several other areas of food and drink recorded negative inflation in May, but the high prices in some categories are evidence of the ongoing turbulence in the foodservice sector.

“The upward movement in inflation to its highest level so far this year will not be welcome news for operators,” said Shaun Allen, Chief Executive at Prestige Purchasing.

“The industry has experienced a continuous stream of supply issues this year which is contributing to the rise in inflation within the foodservice sector and the recent shortage of CO2 is only likely to add further pressure over the coming months.

“With more turbulent times expected as we head towards Brexit, it will be more important than ever that businesses take a proactive approach to managing the risks of inflation.”

Fiona Speakman, CGA Client Director – Food, added: “Our new Foodservice Price Index report is a reminder that inflation in the industry remains unpredictable.

“While some areas of food and drink have seen some welcome price stability in recent months, other categories are vulnerable to supply shocks. For all businesses, it is crucial to properly understand inflation trends and adapt purchasing and pricing strategies accordingly.”