Wed 3rd Apr 2024 - Food price inflation in hospitality falls again but remains more than double the rate seen in retail sector Food price inflation in hospitality falls again but remains more than double the rate seen in retail sector: Food price inflation in hospitality remains more than double the rate seen in the retail sector despite steady easing over the last 12 months, the new edition of the CGA Prestige Foodservice Price Index reveals. In March 2023, the level of food inflation in hospitality and retail briefly converged at 19%. However, while inflation in retail as measured by the Consumer Price Index has eased since then to 5%, wholesale price inflation for hospitality operators as measured by the Foodservice Price Index has only fallen to 12%. This means inflation in hospitality is currently 2.4 times higher than in retail. Supermarket food inflation typically falls faster than in the hospitality sector due to big retailers’ ability to swiftly pass on reductions in energy and commodity costs to consumers. These businesses often have more streamlined supply chains and can adjust prices quickly in response to market changes and government pressure to keep food prices stable – especially during economic downturns, which can accelerate the deflation process. In contrast, hospitality suppliers, with more fragmented and complex operational models, may not be able to reflect cost savings so rapidly. In more positive news for hospitality businesses, 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 oils and fats the only one in deflation. Shaun Allen, chief executive of Prestige Purchasing, said: “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.”