Foodservice price inflation falls for second month

By Sophie Witts

- Last updated on GMT

Foodservice price inflation falls for second month

Related tags Inflation

Foodservice price inflation fell for the second month in a row in October to reach 5.8%, though concerns remain about the impact of Brexit.

It comes after inflation dropped to 6.8% in September, down from a 9.3% high in August.

The latest CGA Prestige Foodservice Price Index showed October was the joint lowest monthly figure recorded since February.

There has been notable easing in key categories such as sugar, where improved supply led to a 6.1% drop in prices year-on-year.

Dairy costs also fell four index points, driven by a 25% drop in butter prices.

CGA says meats and vegetables are also showing ‘impressively low’ inflation as more operators switch to domestic suppliers in the face of rising import prices.

However, pressures on supply mean oil and fat prices are ‘significantly’ higher than last year, with inflation in double figures.

Soft drinks are showing the second highest year-on-year price rises of 13.9%, which CGA says could be due to manufacturers raising prices to try and soften the blow of the sugar tax when it comes in to force early next year.

Looking ahead

The Index indicates that there is cautious optimism that the costs of imports to the UK are settling after a year of historically high levels of inflation.

“There are even a couple of categories now where we believe that there is a realistic chance of price deflation in the next twelve months,” the report states.

CGA commercial director Graeme Loudon added that the evidence was ‘encouraging’.

“The government’s negotiations to leave the EU continue to have a significant knock-on effect on exchange rates and migrant labour, and the sector will need to keep a close eye on issues such as (cold weather phenomenon) La Niña,” says Loudon.

“But the Foodservice Price Index does at least suggest that a welcome degree of stability is starting to return to the supply chain.”

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