Food price inflation hits record high of 24%
It marks the 11th consecutive month of double-digit inflation after a year of intense inflationary pressures for foodservice businesses.
All 10 categories of the Index recorded inflation of at least 10% in December, with more than half topping 20%. The oils & fats category led the surge, with year-on-year inflation surging to a spectacular high of 47%.
“Businesses up and down the foodservice supply chain were besieged by inflation in 2022, and as we enter 2023 there is little respite in sight,” says James Ashurst, client director at CGA by NielsenIQ.
“Alongside the cost of living crisis for consumers, soaring food and drink prices are piling enormous pressures on hospitality, and sustained government support is needed to protect businesses and jobs in this vital sector of the UK economy.”
Going into 2023, the Index reveals mixed signals from supply markets on future pricing. Oil and exchange rates, the two leading upstream influencers on food prices, are more benign than during most of 2022, and the UN’s FAO Food Price Index fell by 1.9% in December 2022 — a ninth consecutive month of decline to take it to 1% below its value a year ago.
However, energy costs continue at extremely high levels against a background of tightening government support, while higher labour costs across supply chains show few signs of relief. With a significant easing in prices only likely to begin with an end to conflict in Ukraine, the Index notes that the outlook for 2023 remains volatile.
“The next step on our inflation journey will be when the current 2% to 4% month-on-month increases start to slow down,” says Shaun Allen, Prestige Purchasing CEO.
“We expect this to start to happen in the months ahead, but we are likely to experience an extended period where prices continue to go up, but just more slowly. These market conditions provide an opportunity for some suppliers to increase prices ahead of market, and buyers should seek hard data to verify and benchmark any increases during 2023.”
