Fri 15th Jul 2022 - Foodservice inflation tops 10% for fourth successive month, not expected to fall below 7% before second quarter of next year Foodservice inflation tops 10% for fourth successive month, not expected to fall below 7% before second quarter of next year: Inflation in the foodservice sector topped 10% for the fourth successive month in May, the new edition of the CGA by NielsenIQ and Prestige Foodservice Price Index revealed. All ten of the Index’s food and drink categories recorded both year-on-year and quarter-on-quarter inflation in the month. The oil and fats (up 3.7%), dairy and fruit categories are seeing the highest rates of year-on-year increases. The report predicted there is little chance that inflation will fall below 7% until at least the second quarter of 2023 – and may yet rise further over the remaining months of 2022. The key factors driving inflation include Russia’s invasion of Ukraine and the mounting costs of energy and supply. War in Ukraine has severely disrupted the supply of food staples including grain and oil, and pushed up the costs of production and distribution via higher crude oil prices and restricted gas supply. Foodservice is also facing increased wage bills, with UK job vacancies reaching 1.3 million in May, while various micro supply and demand issues continue to affect prices in many areas. Prestige Purchasing chief executive Shaun Allen said: “High levels of inflation are clearly around for the long haul. Our analysis shows the delta between operators with average versus good market pricing is now more than 9%, which is about three percentage points of gross margin.” James Ashurst, client director at CGA by NielsenIQ, added: “Inflation now hasn’t been below double digits since January, and the relentless pressure on prices is squeezing businesses across the food and drink sector. With the war in Ukraine and consumers’ cost-of-living crisis mounting, we must expect challenges to get worse before they get better.”