Foodservice inflation 'unlikely to fall below 7%' until 2023, report warns

Foodservice price inflation is unlikely to fall below 7% until at least the second quarter of 2023, a new report has warned.

Inflation in the sector topped 10% for the fourth month in a row in May, according to the CGA by NielsenIQ and Prestige Foodservice Price Index.

All 10 of the index's food and drink categories recorded both year-on-year and quarter-on-quarter inflation during the month.

The oils and fats (up 3.7%) and dairy and fruit categories are seeing the highest rates of yearly price rises.

Russia's invasion of Ukraine has disrupted the supply of food staples, including grains and oils, and pushed up the costs of production and distribution through higher crude oil prices and restricted gas supply.

The report predicts that there is "little chance" that inflation will fall below 7% until at least the second quarter of 2023 and could rise further in 2022.

Prestige Purchasing chief executive Shaun Allen said: "High levels of inflation are clearly around for the long haul. Our analysis shows that the delta between operators with average versus good market pricing is now over 9%, which is about three percentage points of gross margin. Operators would be well-advised to invest in skills and resource to manage this volatile environment."

James Ashurst, client director at CGA by NielsenIQ, said: "Inflation now hasn't been below double digits since January, and the relentless pressure on prices is squeezing businesses across the food and drink sector.

"With the war in Ukraine and consumers' cost-of-living crisis mounting, we must expect challenges to get worse before they get better."

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