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Food supply prices start to firm as hospitality reopens

1st Jun 2021 - 06:00
Inflation is starting to return to food and non-alcoholic drinks after months of falling prices, according to the CGA Prestige Foodservice Price Index.

March figures from the Index show a firming of prices year-on-year as lockdown eases and deflationary pressures related to Brexit receded.

As the hospitality industry gradually restores to full service it is expected that prices will continue to increase month-on-month.

Andrew Dean, client director for retail at CGA, said: “The return of hospitality is a huge relief for operators, the foodservice sector and consumers alike.

“However, the sector faces a long road back to profitability, and the signs of inflation will be unwelcome for businesses already facing a host of other challenges. Keeping a close eye on pricing trends and developments and responding nimbly will be crucial to the recovery process over the remainder of 2021.” 

The March edition of the Index shows a return to ‘significant levels of inflation’ in categories including fruit, meat, breads and cereals.

Shaun Allen, chief executive of Prestige Purchasing, added: “We expect prices to rebound as volumes recover, probably to above 2020 levels as the year progresses. Operators would be well advised to seek price holds from suppliers whilst current inflation levels remain benign.

“They should also avoid taking a renewal of pre-lockdown supply for granted, as the commercial impacts of the Winter lockdown have been harmful to many supplier balance sheets.”

Written by
Edward Waddell