Aside from a slight rise over the summer due to poor conditions for seasonal fruit and vegetables, there has been a month-on-month drop in prices in eight of ten food and drink categories.
However, uncertainty over Brexit and challenges to some categories of food and drink mean more turbulence is possible.
One exception to the ongoing decline has been the Fish category, where year-on-year inflation stood at 13.3% in September. Much of the pressure on prices can be traced back to quota changes last year and the low value of sterling pushing up the cost of imports. Since much of caught fish is frozen, there is a six to 12 month lag before issues like these return to impact pricing in the category.
Prestige Purchasing COO Phil McGuinness said: “We are still seeing issues occurring across multiple categories as we head into the winter months. However, the continued drop in month-on-month inflation across the Index is a good sign for buyers. After a couple of tough inflationary years, the recent trend of negative month- on-month numbers across numerous categories will be helping to relieve pressure on operators.”
For the first time since December 2018, the Soft Beverages category of the Index has seen a 10.6% fall in month-on-month inflation. However, a September drop is expected each year, as suppliers drop prices to drive volume and shift stock after the high demand of the summer months.
After a ‘difficult’ summer for the Fruit category, there has been a month- on-month drop in prices of 2.7%, however this does little to ease pressures, and year-on-year inflation is at 17%.
CGA client director food and retail Fiona Speakman added: “The low value of sterling and a host of weather and supply changes have created significant turbulence in pricing over the last three years, and signs of stability will be very welcome to businesses across the foodservice sector. But high year-on-year inflation in key categories like Fruit, Fish and Soft Beverages are reminders that we are not out of the woods yet, especially with the impacts of Brexit still so uncertain.”