UK foodservice inflation eases but price pressures linger
The CGA Prestige Foodservice price Index hit its lowest level in November.
The CGA Prestige Foodservice Price Index (FPI) reported a decline in inflation to 15% in November, marking its lowest level since July 2022. However, the descent is notably slower than the sharp ascent to the 22.9% peak recorded in December of the previous year.
In comparison, supermarket price inflation, as measured by the Consumer Price Index (CPI), experienced a decline between May and September but is now showing signs of stabilisation in the lead-up to the Christmas season.
The FPI for November revealed that only two categories, oils and fats at 1.4%, and dairy at 8.8%, performed below the 10% year-on-year mark. In contrast, vegetable prices remained exceptionally high, with an inflation rate of 27.3%.
Internationally, the UN FAO Food Commodity Index, which gauges global food commodity prices, held steady at 120.4 points in November 2023, unchanged from October. Noteworthy shifts included increases in the price indices for vegetable oils, dairy products, and sugar, offset by decreases in cereals and meat. The index stood 14.4 points (10.7%) below its level a year ago.
Brent Crude saw a one-dollar-per-barrel decrease in November, with a subsequent sharp fall in early December. Additionally, Sterling appreciated by 4% against the dollar during the month. Meanwhile, annual growth in employees' average total pay, including bonuses, remained over 7% in November.
Commenting on the figures, Shaun Allen, CEO of Prestige Purchasing, acknowledged the challenges faced by wholesalers and the supply chain due to rising costs. He urged vigilance amongst operators as suppliers aim to boost margins and rebuild their balance sheets.
James Ashurst, client director at CGA by NIQ, expressed frustration over the slower return to normal inflation levels after rapid increases. He highlighted the concerning surge in vegetable costs and emphasized that, despite a general decline in the UK inflation rate, businesses in the food supply chain would continue to face pricing pressures for an extended period.