Foodservice inflation stabilises in May as pressures ease in key categories

The fractional deflationary movement brings a measure of stability after an uptick in inflation in April. It demonstrates the continued resilience of UK supply chains in absorbing uncertainty in global commodities.

May’s most significant downward price movements came in fresh produce, dairy, and oils. The vegetables category continued a deflationary trend, after the transition to peak European growing conditions improved supply volumes for salads, leafy crops and outdoor produce.

There was also an easing of prices in the milk, cheese, and eggs category, driven by robust domestic farmgate milk production and intense retail competition, which anchored costs despite fluctuations in global dairy demand. Similarly, the oils and fats category recorded a modest decline, reflecting a notable softening in international palm and soybean oil markets due to weaker global import demand.

However, inflationary pressures continue to affect several other areas of food and drink. Items like soft drinks, jam, syrups and chocolate have been affected by challenges in global sugar markets, including firmer crude oil prices and expectations that a larger proportion of Brazil’s sugarcane crop will be diverted towards ethanol production rather than sugar exports.

The coffee, tea, and cocoa category also inflated in May, as irregular rainfall patterns and low stock levels sustained elevated pricing for coffee out of Brazil and Vietnam. The fish category remained structurally inflationary due to strict North Atlantic quota restrictions and high operational costs in capture fisheries and aquaculture.

Shaun Allen, CEO of Prestige Purchasing, said: “A month-on-month drop of 0.1% in May provides a welcome, albeit slight, reprieve for hospitality operators. The deflation we are seeing in key domestic categories like dairy and vegetables is a testament to strong local supply and the effectiveness of forward buying strategies. However, operators cannot afford to be complacent. The global energy markets remain elevated, directly impacting sugar and beverage costs through ethanol diversion, while structural supply issues continue to plague fish and coffee. As we head into the crucial summer trading period, extreme weather events across major growing regions remain the most significant risk factor. Procurement teams must remain vigilant, leveraging this period of relative stability to secure supply lines against potential climate-driven volatility in the second half of the year.”

Reuben Pullan, senior insight consultant at NIQ, said: “At a time of exceptionally high costs for hospitality, any signs of stability in food and drink prices are welcome. However, many commodities remain at risk of volatility, and sustained deflation seems unlikely. Businesses across the sector are working relentlessly to sustain sales and profits at the moment, with thousands now very fragile. As we enter the second half of 2026 and await a new Prime Minister, many will be hoping for targeted and meaningful industry support for this persistent cost burden.”