Foodservice price inflation falls below 20% for the first time in five months

The decrease was caused by an easing of prices in key commodity markets.

Foodservice inflation dropped to 18.9% in March 2023, the CGA Prestige Foodservice Price Index reveals.

It is the fourth consecutive fall in year-on-year (YoY) inflation and the first time in five months that the rate has dipped below 20%. Whilst prices increased by 0.7% month-on-month (MoM) between February and March,  the report said that there are clear signs that inflation is steadily slowing after enormous challenges throughout the last year.

The downward trend has been driven by an easing of prices in key commodity markets. The Dairy and Oils & Fats categories within the Foodservice Price Index both recorded MoM deflation on the back of improved availability, aided by increased milk production and falling edible oil prices. Only two of the Index’s ten categories reported MoM inflation of 2% or more.

Inflation has also been slowed by significant falls in the cost of crude oil, a major upstream influencer on the price of food. Crude prices fell 24.4% YoY and 4.4% MoM, which should help to alleviate supply costs.

Whilst other factors including labour, energy and currency markets will continue to influence pricing, the new edition of the Foodservice Price Index forecasts further falls in inflation in the months ahead. However, some categories including meat and Sugar are likely to remain volatile as a result of supply uncertainties.

“The continued fall in inflation will be some welcome relief for the hospitality sector. However, prices remain high and with eight out of ten categories still reporting month-on-month increases, the overall cost of food and beverages in the sector continues to rise just at a slower rate. The pressure on operators’ margins is still increasing and acting now to optimise their supply chain and limit the impact is critical,” Prestige Purchasing CEO Shaun Allen said.