Hospitality inflation falls to 2.2% in October

The hospitality sector saw year-on-year inflation fall to 2.2% in October according to the latest Foodservice Price Index report from Prestige Purchasing and CGA by NIQ. 

As the 16th consecutive month of inflation decline, the report says it provided further relief for businesses and consumers after years of high inflation. 

October also recorded month-on-month deflation of negative 0.4%, with prices falling in six of the Index’s 10 categories. 

In year-on-year terms, fish was the only category to experience deflation, while vegetables and sugar, jam, syrups and chocolate continued to report the highest inflation.

While the short-term trend is positive, the government’s recent Autumn Budget has introduced “significant” uncertainty into the outlook for foodservice prices in 2025. 

According to the report, the budget measures are projected to add 2.3% to the previously forecasted rate of inflation. 

If additional wage and National Insurance costs are passed up the supply chain in full, food and drink inflation could also rise sharply again next year.

Shaun Allen, CEO of Prestige Purchasing, said: “While the continued easing of year-on-year inflation is encouraging, the potential impact of the autumn budget is a serious concern. The foodservice sector is still grappling with ongoing volatility, and the possibility of further significant price increases in 2025 adds another layer of complexity.”

Reuben Pullan, senior insight consultant at CGA by NIQ, added: “16 successive months of inflation decline has brought welcome respite for hospitality ahead of the crucial Christmas and New Year period. However, the Budget’s new burden on employers threatens the fragile recovery and will undermine the confidence of both businesses and consumers.

“This is a resilient and entrepreneurial sector with a bright long-term future, but cost pressures are likely to make for a difficult trading environment for some time to come.”