Hospitality operators are facing renewed pressure across the supply chain, as food and beverage prices rose sharply in June, according to the latest CGA Prestige Foodservice Price Index (FPI).
All ten categories of the Index recorded month-on-month increases, with nine showing year-on-year inflation. The overall basket rose by 2.0%, a clear sign of broad-based cost pressures hitting the foodservice sector.
The latest uplift follows significant changes to staffing costs introduced in April, which are now “clearly translating into higher food and beverage pricing,” according to the Index authors. Other pressures include rising packaging and raw material costs, and the impact of extreme weather events on the supply of fresh produce.
Year-on-year inflation in the mineral water, soft drinks and juices category reached 6.4%, with polymer plastic prices more than doubling since November 2024. Persistent inflation in raw materials like sugar and fruit concentrates has added to the pressure on essential beverage lines.
Meanwhile, month-on-month inflation in both the fruit and vegetable categories reflects the effect of ongoing heatwaves and dry spells across Southern Europe, a region that supplies around 65% of the UK’s fresh fruit and a high proportion of vegetables. Despite a slight year-on-year reduction in vegetable prices of 0.6%, June saw fresh increases of 1.0% and 0.9% in vegetables and fruit respectively.
Protein and dairy products remain under pressure, with beef impacted by reduced cattle supply, chicken affected by higher feed costs and new welfare initiatives, and lamb constrained by smaller breeding flocks. Tight global milk supplies continue to push up butter pricing, adding further complexity for buyers.
Shaun Allen, CEO of Prestige Purchasing, said:,“The June FPI paints a stark picture of renewed inflationary pressures gripping the foodservice sector. The broad-based nature of these increases, with all categories showing month-on-month inflation, signals a challenging period ahead. Businesses must be acutely aware of these rising costs and adapt their purchasing strategies to navigate this volatile landscape effectively.”
Reuben Pullan, senior insight consultant at CGA by NIQ, added:, “The latest upswing in inflation adds yet another challenge to hospitality in the crucial Summer months. Alongside labour cost rises of their own, and hesitant consumer spending, it puts some businesses under severe pressure and will force them to push menu prices up further. The impact of climate change on fresh produce is particularly alarming, and extreme weather is very likely to make matters worse in the years ahead.”
The report suggests that these inflationary trends are set to continue, creating ongoing challenges for procurement, pricing and planning across the hospitality industry.
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