Fish price inflation fell to its lowest level since July 2018 in December, the new edition of the Foodservice Price Index from CGA and Prestige Purchasing reveals. It follows good availability of salmon during the seasonal peak in demand over Christmas.
The Oils and Fats category of the Index also saw a sizeable easing in year on year inflation as butter prices continue to soften—but the Soft Drinks category recorded a significant rise, partly due to the impact of the sugar tax during the Christmas trading period.
Seven of the ten categories of the Foodservice Price Index showed inflation compared to December 2017, with just three categories deflationary. In a more positive sign, the overall inflation figure fell month on month, with evidence that pressures are starting to ease in some categories.
Fish, which had been tracking at high inflation levels for most of 2018, dropped back, thanks to the build-up of salmon supplies, excellent production in Scotland and increased availability from Chile. However, with the impact of Brexit still uncertain, and reduced quotas for cod and haddock still in place, price movements are likely to remain volatile, and inflation could remain high in 2019.
The Soft Drinks category has replaced Fish in the top two inflationary categories this month, with inflation significantly up against December 2017, owing to strong demand in the mixers market in particular, as well as the sugar tax—though month on month movement was better, decreasing by 1.4%.
Inflation in the Oils and Fats category remains high, though there has seen an improvement from the previous month’s year on year figure. December is the second month running in which the figure has dropped: an encouraging sign that prices are continuing to ease, supported by wholesale butter prices down by 8% against the same time last year.
There is more downward movement in the Sugar category, with a year on year decrease in inflation of 14.9%, mainly down to overproduction. We may however start to see prices rise in the coming months due to droughts in South and North Eastern Brazil, which are causing problems for sugar cane production. At present, production continues to exceed sugar consumption globally, but world supply could be affected if the dry weather conditions in Brazil continue.
In other categories, inflation in Meat and Poultry is also down against December 2017, while in contrast the Vegetables, Fruit and Dairy categories are all showing year on year inflation.
Shaun Allen, chief executive at Prestige Purchasing, said: “Whilst overall inflation remains at a high level in the foodservice market, it is encouraging to see some much-needed downward movements across a number of categories this month. However, with the departure date from the EU now less than two months away and the uncertainty of what potential impacts this could have on the food and drink supply chain, we are likely to continue to see high levels of volatility during 2019. It is more important than ever that businesses have strong risk management plans in place to mitigate and manage the future risks to supply and inflation.”
Fiona Speakman, CGA client director – Food, said: “Our Foodservice Price Index indicated significant volatility in price inflation for the sector throughout 2018, and there are already ample signs that we can expect more uncertainty in 2019. News of an easing of inflationary pressures in important categories like Fish and Oils and Fats is welcome respite after months of upward movement, but it is offset by moves in the other direction in categories like Soft Drinks. Businesses across the sector will now be closely watching the impacts of Brexit on foodservice prices, and hoping for a period of calmer inflation as the year goes on."
The exclusive Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using foodservice data drawn from 7.8m transactions per month. It contains myriad insights and information pertinent to the foodservice sector, and is essential reading for anyone seeking to keep ahead of price trends and understand why they occur. More information on specific categories is available on a subscription basis. https://www.prestige-purchasing.com/services/foodservice-price-index-fpi