Food and drink inflation surges, with more rises to come
Inflation is currently being driven by a combination of factors including the impacts of the Covid-19 pandemic, lockdowns on food & drink production, ‘ongoing chaos’ in international shipping and the sharply rising costs of energy and petrol across the supply chain.
Brexit has ‘choked Britain’s labour market’, leading to shortages of product and higher wages. The report has also forecasted further price rises over the next three to six months.
The current crisis in Ukraine may add to disruption by driving gas prices to new highs and disturbing the wheat market. Many economists expect the overall Consumer Price Index to rise to 8% during 2022 and the CGA Prestige Foodservice Index predicts similar levels for food.
Shaun Allen, chief executive of Prestige Purchasing, said: “2022 will be a year we will all remember as the first year of significant inflation for over a decade. Coupled with rising costs in other areas such as energy and wages these increases will impact margins without both strong management action on procurement, and the raising of prices.”
The shipping crisis is slowly resolving itself, container prices are expected to fall by this summer and production is gradually stabilising as Covid-19 vaccination programmes continue to be rolled out.
James Ashurst, client director at CGA, added: “As the out-of-home food and drink market recovers from two years of Covid disruption, high inflation is the last thing it needs. 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.”