Propel Morning Briefing

Foodservice price inflation will continue to ease in 2018 but many products will cost more

Foodservice price inflation will continue to ease in 2018 but most prices are unlikely to fall, Prestige Purchasing’s Annual Food & Drink Inflation Report has revealed.

After hitting a high of 9.3% in August, foodservice price inflation is expected to ease to 3.4% by the end of 2018, but many products will still cost more, according to the report.

Prestige Purchasing said restaurant operators and caterers hoping for a return to normal inflation levels in 2018 would be disappointed.

However, the extremely high degree of volatility should reduce in the year ahead.

The company, which publishes the monthly Foodservice Price Index alongside partners CGA, is expecting exchange rates and oil prices to remain broadly in line with 2017 but is concerned over heightened risk from labour costs, weather and several specific ingredients where current supply challenges may intensify.

As a result, it predicts food and drink inflation in foodservice to average at 3.6% during 2018, with December 2018 inflation at 3.4%.

Prestige Purchasing head of consulting and insight Christopher Clare said: “In 2017, we have seen inflation at the kitchen door surge ahead of increases in supermarket prices. By contrast to foodservice supply, the retail market for food is highly competitive and supermarket operators have absorbed increases into margin or delayed and refused increases from producers altogether.”

Prestige Purchasing chief executive Shaun Allen added: “Looking to 2018, levels of volatility are falling but we still expect challenges in seafood – including tuna, butter (and dairy as a whole), eggs due to fipronil, and vegetable oils. With all the current uncertainty that surrounds our exit from the EU, the year after (2019) still looks a very high-risk year for the cost of food and drink.”

The Foodservice Price Index has been independently developed by Prestige Purchasing and CGA specifically for the foodservice sector and analyses prices of more than seven million transactions each month.

 

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