Food supply prices start to firm as hospitality reopens

March figures from the Index show a firming of prices year-on-year as lockdowns moved towards loosening and deflationary pressures related to Brexit receded.

As hospitality gradually restores full service and government policy regarding public sector debt, taxation and inflation becomes clearer, it is expected that prices will continue to increase month-on-month.

“We expect prices to rebound as volumes recover, probably to above 2020 levels as the year progresses," says Shaun Allen, CEO of Prestige Purchasing.

"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.”
The March edition of the Index shows a return to significant levels of inflation in categories including fruit, meat and breads and cereals. The traditional firming of prices that is seen in the Spring season has also contributed to the upward movement.

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

"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.”