Foodservice sector being warned of rising inflation

Foodservice operators have been told that they are on the front line of rising inflation.

Supply chain consultant Prestige Purchasing warned that while the latest Consumer Price Index (CPI) indicated that prices were more than 2% lower than last year, the Foodservice Price Index (FPI) showed that the foodservice sector was experiencing supply charges of almost 2% more than last year.

The FPI was produced by Prestige Purchasing in conjunction with CGA Strategy, designed especially for the foodservice and catering sector as a more targeted and accurate version of the CPI.

The results were uncovered by analysing over four million lines of data points a month over a two-year period, allowing foodservice operators to accurately track their performance against food inflation.

Comparing CPI to FPI findings, the gap in inflation has increased 2% over the last 12 months. This has been attributed to agricultural and political factors, as well as aggressive supermarket discounting suppressing CPI figures.

Despite what CPI is showing, were seeing a noticeable rise in inflation for foodservice operators, and the widening gap between CPI and FPI is one of the many huge challenges operators are facing, said David Read, chief executive of Prestige Purchasing. While consumers are protected somewhat by the continued supermarket price wars, political and agricultural supply issues have let to a perfect storm, which is driving prices up.

For some contract caterers this problem is further compounded by clauses that benchmark budgets to CPI. Our message to those who do have these clauses, is to review them immediately and link them to the true cost of supply for operators.

Read added that there has never been a more relevant time for accurate pricing data. Looking to 2017, the Trump presidency, the triggering of Article 50, a restriction on oil production, and Russian sanctions are just some of the headline factors that will affect inflation it is this that has prompted our organisations to collaborate and develop the only industry-specific index that will allow foodservice operators to track their performance versus food inflation in our industry, he said.

Phil Tate, chief executive of CGA Strategy, added that it was an uncertain time for pricing. With so many macro- and micro-economic factors impacting on the food supply chain at the moment, there are significant issues for both supply and consumer-side pricing but smart operators will find ways to mitigate the extra costs and grow their market share, he said. This index gives them the tools they need to track food pricing, monitor their performance and protect their margins.

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