Foodservice price inflation persists as global commodity markets rebound

Food and drink prices in the hospitality sector rose by 0.4% month-on-month in August, the Foodservice Price Index from Prestige Purchasing and NIQ reveals.

Upward movement in prices indicates that inflationary pressures remain firmly embedded across the hospitality supply chain, driven by a strengthening of underlying global commodity markets and ongoing weather-related concerns.

High-inflation areas of the Index in August included the sugar, jam, syrups and chocolate category. Global sugar market prices moved sharply upwards as adverse weather conditions in Europe and Asia, combined with lower production in Brazil, significantly tightened supply expectations. These factors overshadowed a slight monthly decline in domestic pricing, highlighting the vulnerability of the category to international market shocks.

The meat and poultry category also returned to inflation, reflecting renewed pressure across global protein markets. Strong demand and constrained supplies, particularly for pork and lamb, pushed international prices higher, further exacerbated by elevated feed and operational costs.

Elsewhere in the Foodservice Price Index, the milk, cheese and eggs category recorded its highest month-on-month increase in several months, after a tightening of raw milk availability in Europe due to hot and dry weather drove cheese and milk powder prices up. There was upward momentum in the oils and fats category as global vegetable oil markets hit their highest level since 2022, following high demand for palm and soybean oils and concerns over the potential impact of El Niño.

These increases were partly balanced by deflationary movements in some areas of fresh produce. Prices dropped in the vegetables category thanks to favourable domestic supply conditions, although prolonged dry weather in the UK and Europe threatens future yields for several field-grown crops. Fruit inflation eased, driven by strong seasonal availability of UK-grown soft fruits, stone fruits and early apples. Despite this relief, overall inflation is a sign that climate variability and global supply constraints continue to exert persistent upward pressure on foodservice costs.

Shaun Allen, CEO of Prestige Purchasing, said: “While a 0.4% month-on-month increase shows that inflation remains in the market, it is a relatively minor fluctuation that suggests a level of temporary calm across the broader supply chain. We are seeing strong domestic supply in fresh produce actively balancing out the more volatile global commodity markets like sugar and dairy. However, operators should enjoy this relative stability while remaining highly vigilant. The overarching trend still points to persistent, underlying pressures driven by climate variability and geopolitics. The calm we are experiencing now requires proactive, strategic planning to ensure businesses are resilient when the next wave of global volatility hits.”

Reuben Pullan, senior insight consultant at NIQ, said: “The monthly uptick in foodservice price inflation is an unwelcome development as hospitality moves towards the crucial quarter of the year. It adds yet further to the huge burden of costs on operators, who will be anxious for targeted support in the government’s October Budget. An easing of some fresh produce prices is welcome, but an exceptionally hot and dry summer means respite may be limited. Sustained relief on inflation is likely to be some way off for businesses and consumers alike.”