Foodservice price inflation accelerates in September as global energy and crop pressures mount

Food and drink prices into hospitality rose by 0.9% month-on-month in September, the latest Foodservice Price Index from NIQ and Prestige Purchasing reveals.

After modest monthly movements over the summer, it is a notable increase as the sector moves into the crucial run-in to Christmas. The domestic market is facing a renewed wave of global inflationary challenges, driven by a jump in international crude oil prices and tightening agricultural supplies of major commodities.

Cost increases in September were concentrated in categories that are heavily reliant on crop-based commodities and energy-intensive logistics. Cooking oils, bakery products and sugar-led categories of the Index all rose month-on-month, mirroring global market benchmarks that have reacted to adverse weather in key growing regions and logistical disruptions in the Black Sea.

The transition from the domestic summer harvest is also beginning to impact fresh produce. As reliance on imported fruit and vegetables increases, the lingering effects of the summer’s prolonged hot and dry conditions across Europe are becoming apparent, particularly through reduced yields in staple crops like potatoes and onions. Meanwhile, the seafood sector remains structurally inflationary, hampered by strict quota reductions that have prevented any seasonal easing of prices.

While nearly the entire basket of the Foodservice Price Index was inflationary in September, there was marginal relief in the meat and poultry sector, as poultry and pork markets softened due to recovering animal growth rates and ample export availability from the Americas. However, this minor deflation is overshadowed by the firmness of the wider market, as producers across all categories grapple with the resurgence in global fuel and distribution costs.

Shaun Allen, CEO of Prestige Purchasing, said: “The 0.9% month-on-month increase in September demonstrates that inflationary momentum is steadily building as we head into the winter. We are seeing a potent combination of macroeconomic pressures hitting the supply chain simultaneously. The significant rise in crude oil prices over the last month is already beginning to inflate transport and packaging costs, while global markets for cereals, oils, and sugar are tightening due to extreme weather and geopolitical friction. While our domestic supply chain navigated the summer with impressive resilience, the transition to imported winter produce will expose operators to these harsher global realities. Now is the time for procurement teams to act proactively, locking in supply and hedging against what could develop into a highly volatile final quarter of the year.”

Reuben Pullan, Senior Insight Consultant at NIQ, said: “Solid sales growth and stability in pricing brought some welcome relief for hospitality over the summer after a tough first half of the year. But resilience is now under renewed pressure from this latest uptick in food and drink prices, which will squeeze operators’ margins even tighter and force them to look again at menu prices. As we move into the crucial Christmas and New Year period, the sector will be keeping everything crossed for an easing of macro and micro inflationary factors and an upswing in consumers’ spending confidence.”