Supply chain chaos driving foodservice inflation

Significant shortages in both labour and materials are increasing foodservice price inflation, according to the new CGA Prestige Foodservice Price Index (FPI).

Supply chain challenges paired with heightened demand across the hospitality sector pushed prices up by 1.2% in August, the latest FPI reveals. 

The report highlights the damaging impact of acute labour shortages, including HGV drivers, pickers, and manufacturing and production staff. Job vacancies hit a record high in the third quarter of 2021, with foodservice taking the biggest hit, currently seeing six vacancies for every 100 employees. 

The labour crisis has led to insufficient manufactured stocks, with issues exacerbated by post-Brexit difficulties in the imports of goods. Shortages of packaging materials and harvest issues have further compounded supply chain problems across the hospitality industry. 

August was the first full month of restriction-free trading across the UK since March 2020, with the return of consumers to restaurants, pubs and bars subsequently increasing demand for food and drink items, further fuelling price inflation.

Growth in costs were considerably higher than the 1.2% seen in some key categories of the FPI, with soft drinks rising 8%, and breads and cereals up 6.1%. As staff, logistics and import costs continue to surge, the Index forecasts continued inflation for the rest of the year and into 2022, with the rate increases likely to increase sharply in the short-term. 

"With Christmas approaching fast it is essential that operators are well in control of their supply chains in advance of what will be a bumpy period for both cost and availability of product," said Shaun Allen, CEO of Prestige Purchasing. "Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year."

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