Figures from the latest Foodservice Price Index from NIQ and Prestige Purchasing show the slight decline was primarily driven by downward price movements in fresh produce, dairy, and oils.
The vegetables category continued a deflationary trend, after the transition to peak European growing conditions improved supply volumes for salads, leafy crops and outdoor produce, it says.
There was also an easing of prices in the milk, cheese, and eggs category, driven by robust domestic farmgate milk production and intense retail competition, which anchored costs despite fluctuations in global dairy demand.
Similarly, the oils and fats category recorded a modest decline, reflecting a notable softening in international palm and soybean oil markets due to weaker global import demand.
The slight decline brings a measure of stability after an uptick in inflation in April, reflecting the continued resilience of UK supply chains in absorbing uncertainty in global commodities.
“At a time of exceptionally high costs for hospitality, any signs of stability in food and drink prices are welcome,” says Reuben Pullan, senior insight consultant at NIQ.
However, inflationary pressures continue to affect other areas of food and drink, including soft drinks, jam, syrups and chocolate that have all been affected by challenges in global sugar markets, including firmer crude oil prices and expectations that a larger proportion of Brazil’s sugarcane crop will be diverted towards ethanol production rather than sugar exports.
The coffee, tea, and cocoa category also experienced a rise in inflation driven by irregular rainfall patterns and low stock levels.
“A month-on-month drop of 0.1% in May provides a welcome, albeit slight, reprieve for hospitality operators,” says Shaun Allen, CEO of Prestige Purchasing.
“The deflation we are seeing in key domestic categories like dairy and vegetables is a testament to strong local supply and the effectiveness of forward buying strategies.”
“As we head into the crucial summer trading period, extreme weather events across major growing regions remain the most significant risk factor.
“Procurement teams must remain vigilant, leveraging this period of relative stability to secure supply lines against potential climate-driven volatility in the second half of the year.”