Hospitality food inflation drops but still doubles retail rates

According to the latest findings from the CGA Prestige Foodservice Price Index, despite a gradual decline over the past year, food price inflation in the hospitality sector remains more than double that of the retail industry.

In March 2023, both sectors experienced a brief convergence in food inflation at 19%. However, while retail inflation, measured by the Consumer Price Index, has since eased to 5%, wholesale price inflation for hospitality operators, as gauged by the Foodservice Price Index, has only decreased to 12%.

This stark difference means that inflation in the hospitality sector currently stands at 2.4 times higher than in retail.

Typically, supermarket food inflation diminishes more rapidly than in hospitality due to the agility of major retailers in passing on reductions in energy and commodity costs to consumers. These large retailers boast streamlined supply chains and can promptly adjust prices in response to market fluctuations and governmental pressures to stabilise food prices, particularly during economic downturns that may expedite the deflation process.

In contrast, hospitality suppliers, operating within more fragmented and intricate models, may not be as swift in reflecting cost savings. However, there is a glimmer of positivity for hospitality businesses as the latest Foodservice Price Index reports month-on-month deflation for only the second time in 28 months, marking the first occurrence since October 2023.

Despite this positive trend, year-on-year inflation remains in double digits in eight of the ten categories outlined in the index, with oils and fats being the sole category experiencing deflation.

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