Food and beverage inflation low but pricing uncertainty looms, analysts say
New data from the CGA Prestige Foodservice Price Index indicates a 12-month low in pricing ahead of major supply chain disruption from the COVID-19 pandemic.
Foodservice pricing reached its lowest point for 12 months in February 2020 with the majority of food and beverage categories showing no or minimal year-on-year inflation, according to the latest edition of the CGA Prestige Foodservice Price Index.
However, they say that it is likely that pricing will be volatile in the coming months as the global COVID-19 pandemic causes major disruption to global supply chains, prompting shutdowns of some industries and consumer sectors worldwide.
Categories already impacted by the COVID-19 pandemic, CGA and Prestige say, include soft drinks, leading to predictions of tighter supplies of drinks in the longer term should Chinese operations remain restricted.
Some categories such as fish and seafood are seeing large price reductions in the early weeks of the pandemic. With demand from China slowing dramatically, analysts say Norway’s export market has diminished, causing oversupply and a drop in salmon spot prices.
The sugar category, meanwhile, recorded a small rise in pricing in February, partly due to a 24% drop in India’s sugar output after a prolonged drought followed by flooding. With India in lockdown during its main sugar harvest, a further tightening of supply on a global scale is said to be expected.
“This is a concerning time for supply chains across the globe. We are already seeing categories affected by the Covid-19 pandemic, and there will be many more affected before we are back to normal. Whilst many operators are currently closed, buyers will need to be prepared for a different landscape both in supply and demand once they are up and running again,” Prestige Purchasing CEO Shaun Allen said.
CGA client director for food and retail Fiona Speakman added: “After a prolonged period of relatively high inflation in the foodservice sector, the last few months have shown signs of welcome stability—but that has been shattered by the COVID-19 pandemic. With out-of-home eating and drinking sectors in lockdown in many countries and availability and distribution facing major disruption, we are likely to see a great deal of inflationary volatility in the months ahead.”
