Third month of double-digit inflation hits food and drink

By Jo Gilbert

Published: 10 June, 2022

Data from CGA has revealed a third month of double-digit inflation for foodservice prices in April, with further rises expected and inflation unlikely to fall below 7% until at least next year.

The trend for high food and drink inflation has been a characteristic of 2022 so far, with high energy costs and an unstable global supply network all adding to the cost of moving goods worldwide.

Now, the trend looks set to continue. According to the latest CGA Prestige Foodservice Price Index (FPI), food and drink prices in April were 10% higher than during the same period in 2021, with inflation set to extend into 2023.

The data only covers non-alcoholic drinks – mineral water, soft drinks and juice – which saw price rise by 0.9% in April. However, the trend mirrors inflation in alcoholic drinks amid rising cost and supply crises, with volatility likely to continue to impact across the board for some time.

Inflationary pressures are also having an impact at the top level of the industry. According to accountancy firm, UHY Hacker Young, losses at the top 100 UK restaurant groups have risen 24% in the past six months alone, from £673m to £832m.

The scale of the losses has been driven by the effects of major restructuring programmes undertaken following the pandemic. Some restaurants that were forced to close saw their debts – primarily to landlords – build up to unsustainable levels.

Losses among the UK’s major restaurant chains have since reached “enormous proportions”, Peter Kubik, partner at UHY Hacker Young said.

“Many of them overextended themselves significantly over recent years, just in time to be hit by Covid and inflation running out of control”.

Volatility among food and drink prices, meanwhile, continue – exacerbated in recent months by Russia’s invasion of Ukraine. The crisis has reduced the production levels of food staples including grains and oils, and driven up energy and fuel costs by increasing oil prices and restricting gas supplies.

The same pressures are having an impact on the wider drinks category, too.

“Although growth in the category looks to be strong, the dominating issues faced over the past two years are still impacting the category,” CGA told Harpers. “Supply chain issues remain, labour issues and increased costs for packaging and fuel, glass availability all continue to impact the category.”

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