Food prices set to rise in coming months as pressures on supply chain grow

Supply issues are expected to lead to rising food prices in the run-up to Christmas and into the New Year.

Sharp cost increases over the winter are predicted in the latest edition of the CGA Prestige Foodservice Price Index as a result of rising demand, product shortages and distribution issues.

The return of schools and increasing levels of performance from hospitality, business and industry drove a surge in volumes in the supply chain in September, leading to a sharp increase in product shortages.

Although problems eased slightly over the month and into October, wholesale suppliers are increasingly suffering a shortage of supplies.

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

Shaun Allen, chief executive of procurement company 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."

James Ashurst, client director at research consultancy 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."