UK food prices rose by 9.8% year in year in March, according to the Foodservice Price Index released by CGA and Prestige Packaging.
Month-on-month inflation remained high in the fish and fruit categories. Fishing was adversely affected by poor weather in the North Sea stopping ships being able to fish on main fishing grounds for a long time, reducing the amount caught. Fishing was also restricted by decreased quotas for cod and haddock over the last year.
The continuing high inflation in the fruit category in March is expected to go down during the spring and summer months, when the UK does not have to rely on imports as much. Dairy prices have also started to fall and are expected to decrease more as the country moves into spring.
Oils and fats prices decreased in March and are below levels that were recorded in March 2018; this drop in inflation is from the decline in butter prices in the UK since October last year as well as major food oil supplies falling below price levels since last year.
Meat prices have also seen a decrease since the Christmas period, with pork and lamb prices remaining low from the same time in 2018. However, there has been a demand for certain meat products including bacon as consumers have been stockpiling in anticipation of Brexit.
CGA client director Fiona Speakman said: “The challenge of inflation in the foodservice sector intensified yet again this month, with prices of important items like fish and fruit running at high levels.
“Combined with Brexit-related economic uncertainty, patchy consumer confidence and various supply issues, it is making forecasting extremely difficult for operators across the industry.
“Whatever the eventual outcome of Brexit negotiations, it will be absolutely crucial in the coming months for all firms to stay right on top of both business-side and consumer-side trends and make their purchasing strategies as sharp as possible.”
Prestige Purchasing chief executive Shaun Allen said: “Food prices in the sector have been consistently tracking at higher levels for nearly a year, and the latest inflation level of almost 10% this month reflects the extent of how much the supply markets have been impacted compared to the same period last year.
“However the outlook on inflation is looking more positive for operators, as the Foodservice Price Index has fallen slightly over the past two months, indicating that inflation in the sector looks to have peaked and is forecast to drop back over the coming months, subject still of course that the outcome of Brexit does not lead to major disruption to availability of products from EU and introduction of WTO tariffs.”
The CGA Prestige Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using foodservice data drawn from 7.8m transactions per month.
Foodservice price inflation was just 1.8% in March 2018, as reported in Verdict Foodservice.