Food prices 'set to rise' as UK economy opens up

20 April 2021

Prices in the foodservice sector are forecast to rise as hospitality opens up after the UK lockdown.

The CGA Prestige Foodservice Price Index saw prices in February drop 2.6% month-on-month, though they were up 2.2% year-on-year.

The index said a repeat of the “considerable firming of prices” following the opening of the economy in summer 2020 “can now be expected”.

Shaun Allen, CEO of Prestige Purchasing, said: “We expect prices to rebound as volumes recover, probably to above 2020 levels by later in the year.

“Operators would be well advised to seek price holds from suppliers whilst the current inflation levels remain benign. They should also avoid taking a renewal of pre-lockdown supply for granted, as the commercial impacts of the winter lockdown have been harmful to many supplier balance sheets.”

Fiona Speakman, client director – food at CGA, said: “After a tumultuous 2020 and early 2021, it is heartening to see the hospitality sector starting to return, and the success of the vaccine rollout raises confidence that consumer spending will bounce back well as the year goes on.

“However, these figures are reminders that foodservice supply remains volatile, and that the many impacts of both Covid and Brexit will be felt for some time to come. All businesses will need to stay alert to pricing issues if they are to make a positive start to the recovery journey.”

The figures come as the Environment, Food and Rural Affairs Committee said the government must urgently recognise the impact of the sector’s closure on suppliers.

In a report the committee said hospitality had seen revenues decline by over £72bn, with some suppliers losing up to 100% of their trade.

The report said the government should conduct an annual food security report until fallout from Covid-19 and Brexit has passed, and a new minister for food security should be appointed. It should also consult on a legal “right to food”.

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