Food price growth is levelling out
The growth in the cost of food for foodservice operators, which have been rising at 14% over the 12 months, to August, is at last seeing a slowdown, according the latest figures from Horizons.
In August, annualised food costs rose by 0.8%, compared with an increase of 3.1% in July. This slowdown in the rate of growth is due to several factors including: the fact there has been a good harvest for some commodities such as wheat and, the fact world commodity prices are beginning to be readjusted. August price rises for fresh fish and vegetables were well below the average.
While foodservice operators increased their prices to consumers slightly in August, since the beginning of the year they have raised prices by one-third of the level of food price inflation. This means that operators have clearly been absorbing much of these increased costs to avoid frightening off increasingly edgy customers with significant price rises.
Despite food costs levelling out, operators still need to do what they can to mitigate cost increases such as reducing portion sizes, buying more cost-effectively and using cheaper cuts of meat, for example. We are still in a period of economic instability and while the eating out market has yet to be significantly hit, the run-up to Christmas could see consumers tightening their belts even further.
