Hospitality food and drink prices rise for fifth month in a row as pressures mount

Food and drink prices in the hospitality sector rose by 0.4% in the month to August, the latest Foodservice Price Index from CGA by NIQ and Prestige Purchasing reveals.

It represents a fifth consecutive month of price increases as hospitality businesses continue to navigate widespread inflationary pressures. Persistent inflation is being driven by a complex mix of global factors, including geopolitical volatility, adverse weather conditions and sustained high input costs. It comes at a crucial time for the hospitality sector, as it prepares for the end-of-year trading period.

Pressures have been particularly acute in key categories including Oils & Fats, where a significant uptick was driven by higher international prices for palm, sunflower and rapeseed oils amid robust global import demand and tightening supplies. The Coffee, Tea & Cocoa category saw the most substantial year-on-year increase, with prices surging as a result of global supply constraints and weather concerns in major producing regions.

The Meat & Poultry category recorded a further price rise, with high inflation in beef and lamb lifting the Food and Agriculture Organization's Meat Price Index to an all-time high. This was in contrast to poultry prices, which declined slightly due to ample supplies from abroad. Costs also rose in the Milk, Cheese & Eggs category, and increased production and labour costs may sustain upward price trends here.

Shaun Allen, CEO of Prestige Purchasing, said: "The August report reflects a difficult and ongoing reality for the hospitality sector. While some prices have stabilised or even slightly reduced, the overall trend is one of persistent increases driven by a mix of climate variability, geopolitical issues and enduring pressures on energy and logistics. Success for businesses in this climate lies in a proactive approach to their supply chain, where strategic planning can help to mitigate the impact of this sustained volatility and build long-term resilience."

Reuben Pullan, senior insight consultant at CGA by NIQ, said: "Yet another increase in food and drink prices is cause for concern as hospitality begins the long run-in to Christmas and New Year. Relentless inflation is tightening the squeeze on consumers' spending in discretionary areas, and sapping the confidence of hard-pressed restaurants, pubs and bars. Businesses will be keeping everything crossed for respite on both macro geopolitical factors and micro supply issues in the coming weeks."