All ten of the Index’s food and drink categories recorded both year-on-year and quarter-on-quarter inflation. The Oils & Fats (+3.7%), dairy and fruit categories are seeing the highest rates of year-on-year increases.
The war in Ukraine has severely disrupted the supply of food staples including grains and oils. 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 that the delta between operators with average versus good market pricing is now over 9%, which is about 3 percentage points of gross margin. Operators would be well advised to invest in skills and resource to manage this volatile environment.”
The report predicts 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.
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.”