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Foodservice inflation set to rise as supply chain issues cause Christmas concerns

17 Nov 2021
The triple threat of rising demand, product shortages and distribution issues are combining to put foodservice prices under severe pressure as the run-up to Christmas begins, according to the latest edition of the CGA Prestige Foodservice Price Index.

The return of schools and increasing volumes from hospitality, business and industry drove a further surge in volumes in the supply chain in September, leading to a ‘sharp increase’ in product shortages. While problems eased slightly over the month and into October, in-bound supply to wholesalers remains under ‘deep stress’.

The supply chain has also faced issues including a chronic shortage of HGV drivers, pickers as well as manufacturing and production staff. This has left insufficient stocks in key areas, with post-Brexit difficulties in the importation of goods adding to the shortages.

Shaun Allen, chief executive of Prestige Purchasing, said: “From a flat September, we expect prices to be up between 3% and 6% year-on-year by the New Year, with an even higher peak thereafter. Operators would be well advised to focus particularly on the weeks commencing 29 November and 6 December, as these are peak volume weeks for our suppliers.”

While the latest edition of the CGA Prestige Foodservice Price Index reports that prices remained flat year-on-year in September, it predicts inflation is likely to rise throughout the remainder of 2021 and into 2022. With operators and suppliers reporting significant price rises in October, the rate of climb is expected to increase sharply in the months ahead.

James Ashurst, client director at CGA, added: “This autumn may prove to be the calm before the storm in foodservice price inflation. Rising demand, falling supply and distribution issues are straining many areas of the market, and prices will inevitably rise in the months ahead.

“It is an unwelcome trend for hospitality businesses that are already facing severe operational challenges, and highlights the sector’s need for sustained government support in the months ahead.” 

Inflation ups and downs against August:

  • Coffee and tea UP 2.1%
  • Fruit UP 0.5%
  • Milk, cheese & eggs DOWN 4.8%
  • Mineral water, soft drinks & juice DOWN 9.3%