Foodservice inflation continues in July as drought concerns mount

Food and drink prices in hospitality rose by 0.2% month-on-month in July, the latest Foodservice Price Index from NIQ and Prestige Purchasing reveals.

While the pace of monthly price increases slowed from 1.8% in June, inflationary pressures remain firmly embedded in foodservice supply chains. Growing concerns over the impact of prolonged heatwaves are creating uncertainty for buyers in key food categories including vegetables, where hot and dry weather has impacted UK crops. Broccoli, cauliflowers, potatoes, onions, carrots and parsnips have all experienced varying levels of moisture stress, creating uncertainty around future yields and availability. While current pricing remains relatively stable, the industry is closely monitoring supply conditions heading into the autumn.

July brought more positive developments in the fruit category, where favourable growing conditions supported strong availability of British strawberries, raspberries, blackberries, blueberries, plums and early-season apples. Good domestic supply helped to lower fruit prices month-on-month, providing welcome relief for buyers.

Elsewhere, international grain markets strengthened during July. Wheat prices rose sharply amid concerns over disruption to Black Sea exports and weather-related challenges in several major growing regions, leading to renewed inflationary pressure for bread and cereal products. Vegetable oil markets also moved higher after high biodiesel demand and ongoing geopolitical uncertainty affecting global supply chains.

By contrast, international meat markets weakened for the first time this year. Softer poultry, pork and beef prices helped to ease overall inflation in the meat category of the Foodservice Price Index, although strong global demand and limited supplies pushed lamb prices to record levels.

July's figures show that while overall foodservice inflation is currently modest, climate-related disruption is fuelling market volatility. As the sector approaches the latter part of 2026, weather conditions are likely to play a critical role in determining the direction of future food and beverage costs.

Shaun Allen, CEO of Prestige Purchasing, said: “July’s marginal 0.2% increase feels like the calm before a potential storm. With UK drought conditions actively threatening domestic vegetable yields, and global grain markets reacting to renewed geopolitical stress in the Black Sea, operators cannot afford to be complacent. The transition from summer to autumn will be a critical period for supply availability, making proactive, data-led procurement absolutely essential.”

Reuben Pullan, senior insight consultant at NIQ, said: “Broadly flat prices in July disguise significant volatility in the foodservice supply chain, and buyers face a very uncertain autumn and winter. While high temperatures can work to the advantage of many hospitality businesses in sales terms, extreme climate issues are likely to have seismic impacts on their operations in the years to come. Mitigating inflation is an urgent priority for venues seeking to retain guests and protect margins.”