While overall year-on-year inflation remains relatively low - below the 2.6% rate recorded by the Consumer Prices Index (CPI) in the 12 months to March 2025 - the latest data presents a ‘nuanced picture’, the Index says.
Oils and fats recorded a significant 5.8% increase compared to March 2024, the highest of any category, while sugar, jams, syrups and chocolate saw a 2.4% year-on-year rise that’s partly attributed to ongoing volatility in cocoa pricing.
“March’s uptick in foodservice price inflation, albeit marginal, is more unwelcome news for hospitality businesses in an extremely challenging environment,” says Reuben Pullan, senior insight consultant at CGA by NIQ.
“Alongside an increase in labour costs from April, it adds to heavy pressure on menu pricing and margins.
“Underlying demand for hospitality remains strong, but all suppliers and operators will be hoping for calmer waters in pricing as we move towards the crucial summer months.”
In a reverse of the usual price reductions seen in the approach to summer, various factors have instead contributed to increases on key items.
Significant rainfall and flooding in Europe, for example, has affected root vegetables, leading to notable surges, particularly in onion prices.
Meanwhile, the dairy sector continues to be impacted by challenges in butter and cream production stemming from adverse weather conditions that affected milk quality and volume last year.
Meat and poultry markets are also facing headwinds, including a tightening of cattle supply, with UK beef production forecast to drop 5% in 2025.
This fall in production is significantly influencing prices, and as the summer BBQ season approaches, increased demand for popular cuts is expected to amplify pressures.
The chicken market also remains volatile due to ongoing avian flu outbreaks in key production regions, causing extended disruptions to supply.
“While the latest CGA Prestige Foodservice Price Index offered a glimmer of hope in March, the persistent pressures in key areas like oils and fats, coupled with emerging challenges in produce, dairy, and particularly meat and poultry, underscore the continued need for strategic supply chain management within the hospitality sector,” says Shaun Allen, CEO of Prestige Purchasing.
“Navigating these complexities will be crucial for businesses looking to maintain margins in the coming months.”