FPI inflation went up like a rocket, but is falling like a feather

Inflation as measured by the CGA Prestige Foodservice Price Index (FPI) fell again during the month of November to 15.0% - its lowest level since July 2022.

The speed of that fall is much slower the equivalent rise to the 22.9% peak that happened in December last year. On the way up, it took just four months to rise from 15% to the peak, on the way down over twice the time period at 11 months.

Meanwhile, levels of supermarket price inflation (measured by CPI) which fell sharply between May and September are beginning to firm again in the run-up to the Christmas period.

In November, FPI saw just two categories (Oils & Fats at 1.4%, and Dairy at 8.8%) performing below 10% year-on-year. This was in stark contrast to Vegetables where inflation remained extremely high at 27.3%.

The UN FAO Food Commodity Index (the overall measure of international food commodity prices) averaged 120.4 points in November 2023, unchanged from its October level, as increases in the price indices for vegetable oils, dairy products and sugar counterbalanced decreases in those of cereals and meat. The index stood 14.4 points (10.7 percent) below its corresponding level one year ago. Brent Crude eased one dollar a barrel in the month, with a sharp fall in early December.  Sterling appreciated 4% during the month against the dollar, whilst annual growth in employees’ average total pay (including bonuses) remained over 7% in November.

Shaun Allen, Prestige Purchasing CEO, said: “There’s little doubt that wholesalers have been battling rising costs, just like hospitality operators and the remainder of the supply chain. But with the market coming off peak-levels of inflation operators need to be especially vigilant as suppliers seek to enhance margins to rebuild their balance sheets."

James Ashurst, client director at CGA by NIQ, said: “After such rapid rises in inflation in recent times, it’s frustrating to see a much slower journey back towards more normal levels. High rises in the cost of vegetables are particularly concerning as we move towards 2024. The general UK rate of inflation may be coming down, but businesses across the food supply chain will be feeling the heat on prices for some time to come.”