Food and drink inflation to stabilise in 2018, but high costs will remain

By Georgia Bronte

- Last updated on GMT

Butter up: the cost of butter is expected to climb again next year
Butter up: the cost of butter is expected to climb again next year

Related tags: Consumer price index

Food and drink inflation is becoming less volatile as it approaches its predicted peak but the industry will still be affected by high prices of certain commodities, says new research.

After hitting a high of 9.3% in August 2017, The CGA Prestige Foodservice Price Index Inflation is expected to ease to 3.4% by the end of 2018. However, many products will still cost more, according to the Prestige Annual Food and Drink Inflation Report.

“Looking to 2018, levels of volatility are falling, but we still expect challenges in seafood – including tuna, butter (and dairy as a whole), eggs due to the Fipronil scare, and vegetable oils,” says Shaun Allen, chief executive of Prestige Purchasing
 
“With all the current uncertainty that surrounds our exit from the EU, the year after (2019) still looks a very high-risk year for the cost of food and drink.”
 
Although inflation levels are not expected to drop dramatically in the coming year, restaurant operators and caterers can seek solace in the fact that the extremely high degree of volatility should reduce in the year ahead.
 
The rise in inflation has come “at precisely the wrong time for retailers”, according to Richard Lim, chief executive at analyst Retail Economics.
 
“In the run-up to Christmas, the cost of living, now rising at the fastest rate in five years, remains uncomfortably high for households,” he says. “[Food inflation] is one of the most transparent indicators of living costs and often the catalyst to cut back on spending elsewhere”.
 
Food and drink inflation in foodservice is expected to average at 3.6% during 2018, with this month’s inflation at 3.4%, according to the FPI Index.
 

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