April wage hike drives higher F&B costs in June

Foodservice price tracker saw a 2% month-on-month increase.

The wage hike in April has started to translate into higher food and beverage pricing, according to a report by CGA by NIQ.

According to their latest CGA Prestige Foodservice Price Index, all 10 categories of the Index recorded month-on-month (MoM) increases, and nine experienced year-on-year inflation amid widespread uplifts in costs. The total basket saw a strong month-on-month increase of 2%.

Notable movers in the Index included the mineral water, soft drinks & juices category, where year-on-year inflation rose to 6.4% thanks to soaring packaging costs, with polymer plastic prices more than doubling since November 2024. Persistent inflation in raw materials like sugar and fruit concentrates has added to the pressures impacting essential beverage lines.

The latest Index also reflects the significant impacts of climate change on the UK's fresh produce supply.

Whilst the vegetable category recorded a slight year-on-year reduction of -0.6%, both this and the fruit category saw MoM increases of 1% and 0.9% respectively. These upticks are largely a direct consequence of adverse climatic conditions, including severe heatwaves and prolonged dry spells across Southern Europe, a critical source for around 65% of the UK's fresh fruit and a high proportion of its vegetable imports.

The report said that such extreme weather events drastically reduce yields and tighten supply, inevitably driving up prices in the UK market.

Elsewhere, persistent supply chain challenges continue to affect key protein and dairy products, with ongoing issues in beef due to reduced cattle supply, chicken impacted by higher feed costs and welfare initiatives, lamb influenced by smaller breeding flocks, and butter facing tight global milk supplies, all adding further complexity to procurement for the sector.

“The June FPI paints a stark picture of renewed inflationary pressures gripping the foodservice sector. Businesses must be acutely aware of these rising costs and adapt their purchasing strategies to navigate this volatile landscape effectively,” Shaun Allen, CEO of Prestige Purchasing, said.

"Alongside labour cost rises of their own, and hesitant consumer spending, it puts some businesses under severe pressure and will force them to push menu prices up further. The impact of climate change on fresh produce is particularly alarming, and extreme weather is very likely to make matters worse in the years ahead,” Reuben Pullan, senior insight consultant at CGA by NIQ, said.