There remains a contrast between FPI and the measure of supermarket pricing (CPI) which is now rising at roughly half the rate (8.5%) year-on-year. October also marked the first month-on-month fall in FPI since September 2021.
In October, FPI saw just one category (oils & fats) perform below 10% inflation at 4.0%, but this was in contrast to vegetables where inflation remained ‘extremely high’ at 30%. Overall, inflation within FPI has fallen 6.2% points since its peak of 22.9% [YOY] in December 2022.
Shaun Allen, chief executive of Prestige Purchasing, said: “The Foodservice Price Index has risen by 40% over the past 24 months, and with inflation still at 16.7% the compound effects of these continued high numbers need to be carefully monitored and managed. As of today, the journey down to normal levels of inflation (about 1% to 3%) is only about one-third complete.”
The UN FAO Food Commodity Index (the overall measure of international food commodity prices) averaged 120.6 points in October, down 0.7 points (0.5%) from September, continuing the downward trend and standing 14.8 points (10.9%) below its corresponding value a year ago.
The report suggests that further inflationary pressure may be felt in the months ahead because sterling has been weaker since the summer against both the $ and the €, whilst UK wage inflation remains around 8%, acting as a brake on the rate of inflation reduction.
James Ashurst, client director at CGA by NIQ, added: “The downward movement in foodservice price inflation is starting to build momentum, and we can optimistic that pressures will ease further for businesses and consumers alike in 2024. Nevertheless, rates remain very high and continue to put strain on prices and profits. The long-term outlook for those in the foodservice chain remains good, but we are not out of the woods yet.”
A snapshot of the FPI report can be downloaded here.