Cost pressures intensify after Foodservice price inflation hits double digits in February

The Foodservice industry remains under constant and seemingly continuous pressures, from trying to build back as a result of the pandemic, recent increases in energy costs, continued staffing shortages, supply chain issues, food inflation and now even higher inflation which is predicted for the future as Russia’s invasion of Ukraine adds to challenges.

EP, in partnership with Prestige Purchasing, look to share regular knowledge and insight on the supply chain and Foodservice inflation situation throughout this year, culminating in a knowledge share event in December 2022. It is fair to say, the industry seems to be set for a turbulent time.

Year-on-year inflation in the foodservice sector hit 10.2% in February 2022, the latest edition of the Foodservice Price Index from CGA and Prestige Purchasing reveals. The double-digit increase was fuelled by challenges including a surge in demand, the lingering impacts of COVID, additional costs of trade after Brexit and surges in energy and packing prices. Inflation has been further heightened by the comparisons with February 2021, when Britain’s lockdown temporarily eased the pressure on prices.

Inflation in the Foodservice Price Index is now running at exactly twice the level of the comparable Consumer Price Index number. It underlines the structural differences between the retail and foodservice sectors, with security of volumes and tighter ranging, forward contracting and hedging used to protect pricing over a more extended period in the retail sector.

The report from CGA and Prestige also highlights the volatility of pricing, with a wide range of highs and lows across its ten categories. The Sugar category recorded a drop of 10.9%, while Oils & Fats was up by 56% year-on-year. Five of the ten categories have inflation of more than 20%, with Fish, Fruit, Dairy and Soft Drinks also affected.

Inflation will become even more acute following Russia’s invasion of Ukraine in late February and the war will add to the stress on energy markets and generate new challenges in key commodities like Wheat, Oils & Fats, Fish and Fertilisers. This is likely to drive up prices for months to come, and further increases in inflation are inevitable.

It is not an overly reassuring picture for the industry at present but with regular knowledge share, collaboration and the resilience we know that the industry is renowned for, we are positive for the future.