Food price inflation in the hospitality sector continues to exceed that of the retail sector, despite some easing over the past year, according to the latest CGA Prestige Foodservice Price Index.

In March 2023, food inflation in the hospitality and retail sectors briefly converged at 19%. However, while retail inflation measured by the Consumer Price Index has decreased to 5% since then, wholesale price inflation, has only decreased to 12%. This implies that the inflation of fish and potato in wholesale is currently more than double that of the retail sector.

Supermarket food inflation typically decreases more rapidly than in the hospitality sector due to the ability of major retailers to quickly pass on cost savings to consumers. These retailers often have more efficient supply chains and can adjust prices promptly in response to market dynamics and government pressures to stabilize food prices, particularly during economic downturns.

On the other hand, fish and potato suppliers, with their more fragmented and complex operational models, may not be able to reflect cost savings as quickly. However, there is some positive news for fish and chip businesses, as the latest Foodservice Price Index reports month-on-month deflation for only the second time in 28 months, and the first time since October 2023.

Year-on-year inflation remains in double digits in eight of the ten categories of the index, with only oils and fats experiencing deflation. Shaun Allen, chief executive of Prestige Purchasing, noted, “It is positive to see inflation continuing to fall, and it will be encouraging for operators to see that after two years of sharp increases, food prices have fallen month-on-month in five categories.”

James Ashurst, client director at CGA by NIQ, added, “Hospitality has dealt well with the inflation crisis but has inevitably had to pass on higher costs to menus, which in turn compromises consumer spending. We will hopefully see more easing over the spring and summer, but for now, the trading environment remains challenging.”