Labour, materials shortages driving up price inflation: report      

The CGA Prestige Foodservice Price Index predicts continued inflation over the remainder of 2021.

Widespread supply problems and increased demand from the hospitality sector combined to push up prices by 1.2% in August, according to the latest CGA Prestige Foodservice Price Index.

Some categories rose at a much higher level, with soft drinks jumping 8.0%, and breads & cereals up 6.1%. 

Whilst August also brought the first full month of restriction-free trading for UK hospitality businesses since March 2020, the sustained return of customers has increased demand for many food and drink items, and further fuelled price inflation.

As staff, logistics and import costs continue to rise, the Index projects continued inflation over the remainder of 2021 and well into 2022, with the rate of rises “likely to increase sharply in the short term.”

The report arrives as UK job vacancies hit a record high in the third quarter of 2021. The foodservice sector is considered to be one of the hardest hit, with nearly six vacancies for every 100 employees at the moment.

The labour crisis has resulted in insufficient manufactured stocks, with problems compounded by post-Brexit difficulties in the imports of goods. Shortages of packaging materials and harvest issues in some parts of the world have further contributed to supply chain problems across the foodservice sector, CGA and Prestige Purchasing noted.

“With Christmas approaching fast it is essential that operators are well in control of their supply chains in advance of what will be a bumpy period for both cost and availability of product. Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year,” Shaun Allen, CEO of Prestige Purchasing, said.

“Hospitality is making a robust recovery from the COVID crisis, but these inflation figures threaten to stall the momentum that businesses have achieved. While consumer demand remains strong, the likelihood of steeper inflation puts already vulnerable businesses under renewed pressure, and reinforces the case for sustained support from government on tax, labour, supply chain and many more issues,” Andy Hodgson, client manager at CGA, added.

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