Food and drink inflation doubles in one month

The CGA Prestige Foodservice Price Index reported a sharp acceleration of price increases in January, with year-on-year inflation of food and drink running at +7.9%, more than double the rate in December. 

For the first time since its launch in 2016, every category in the index showed a month-on-month increase, with food rising 4.4% across the board compared to one month prior. 

Notable category movements month-on-month in January include oil and fats (+7.9%); milk, cheese and eggs (+6.8%); mineral water, soft drinks and juice (+2.9%) and fish (+2.6%). 

While the impact of the pandemic on price increases has started to recede, the rising cost of energy, petrol and dielsel now dominate. In Britain, Brexit policy has stifled the labour market, leading to shortages of product and higher wage costs for food and drink. 

The exclusive report notes that these unusually high levels of inflation were recorded before the Russian invasion of Ukraine, which is anticipated to prompt further price rises across a number of food categories includijng wheat, sunflower oil, barley, corn, potatoes and rice. Sanctions on Russia are likely to causes rises in oil and gas prices, driving food and drink inflation even higher. 

James Ashurst, client director at CGA, comments: "Hospitality was starting to make a robust recovery from the effects of the pandemic and following a tough winter period. These inflation figures pose further challenges to businesses which are already squeezed by rising costs and pressure on supply chains."

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