Labour and materials shortages drive up foodservice price inflation by 1.2%

Widespread supply problems and increased demand combined to push up prices by 1.2% in August, the new edition of the CGA Prestige Foodservice Price Index reveals.

The report highlighted the damaging impacts of acute shortages of labour, and of HGV drivers, pickers and manufacturing and production staff in particular. UK job vacancies hit a record high in the third quarter of 2021, and foodservice has been the hardest hit, with nearly six vacancies for every 100 employees.

The labour crisis has led to insufficient manufactured stocks, with problems compounded by post-Brexit difficulties in the imports of goods. Shortages of packaging materials and harvest issues in some parts of the world have further contributed to supply chain problems across the foodservice sector.

August also brought the first full month of restriction-free trading for UK hospitality businesses since March 2020. The sustained return of customers to restaurants, pubs, bars and other premises increased demand for many food and drink items, and further fuelled price inflation.

Price rises were significantly higher than 1.2% in some key categories, with soft drinks rising 8%, and breads and cereals up 6.1%. As staff, logistics and import costs continue to rise, the Index predicted continued inflation over the remainder of 2021 and well into 2022, with the rate of rises likely to increase sharply in the short term.

Shaun Allen, chief executive of Prestige Purchasing, said: "With Christmas approaching fast it is essential that operators are well in control of their supply chains in advance of what will be a bumpy period for both cost and availability of product. Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year."

Andy Hodgson, client manager at CGA, said: "Hospitality is making a robust recovery from the Covid crisis, but these inflation figures threaten to stall the momentum that businesses have achieved. While consumer demand remains strong, the likelihood of steeper inflation puts already vulnerable businesses under renewed pressure, and reinforces the case for sustained support from government on tax, labour, supply chain and many more issues."

Photo: Dusan Petkovic/Shutterstock.com