Foodservice inflation reached 3.5% in December

Year-on-Year inflation across foodservice industries reached 3.5% in December 2021, according to the latest CGA Prestige Foodservice Price Index. 

The report forecasts further price rises over the next three to six months, driven by the impacts of Covid-19 and subsequent lockdowns on food and drink production, continuing chaos in international shipping, and the sharply rising costs of energy and petrol across the supply chain. 

Brexit has also shaken up Britain's labour market, leading to shortages of product and higher wages. The current dispute between Russia and Ukraine may add to the disruption, driving gas prices to new highs and disturbing the wheat market. Even without the escalation of war, many economists expect the overall Consumer Price Index to rise to 8% during 2022, and the CGA Prestige Foodservice Price Index predicts similar levels for food. 

Unlike previous inflationary periods, the report anticipates that the current spike will be relatively temporary. The shipping crisis is slowly resolving itself, container prices are expectred to fall by summer and production is gradually stabilising as Covid vaccination programmes continue. 

"As the out-of-home food and drink market recovers from two years of Covid disruption, high inflation is the last thing it needs," says James Ashurst, client director at CGA. "With consumers' spending increasingly squeezed by rising costs as well, sales and profits are going to be under strain for at least the next few months. Businesses will have to work hard to mitigate the effects of inflation and hope for an easing of pressures as 2022 goes on."

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