August labour and material shortages drive prices up 1.2%, warns CGA

Widespread supply problems and increased demand from the hospitality sector combined has pushed prices up by 1.2% in August, according to the latest CGA Prestige Foodservice Price Index (FPI).

The report highlighted the impacts of acute shortages of labour, and of HGV drivers, pickers and manufacturing and production staff in particular.

UK job vacancies hit a record high in the third quarter of 2021, with foodservice amongst the hardest hit sectors, with nearly six vacancies for every 100 employees at the moment.

August also brought the first full month of restriction-free trading for UK hospitality businesses since March 2020.

As staff, logistics and import costs continue to rise, the Index has predicted that inflation will continue over the remainder of 2021 and well into 2022, with the rate of rises likely to “increase sharply” in the short term.

Shaun Allen, CEO of Prestige Purchasing, said: “With Christmas approaching fast it is essential that operators are well in control of their supply chains in advance of what will be a bumpy period for both cost and availability of product.

“Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year.”

Andy Hodgson, client manager at CGA, added: “Hospitality is making a robust recovery from the Covid crisis, but these inflation figures threaten to stall the momentum that businesses have achieved.

“While consumer demand remains strong, the likelihood of steeper inflation puts already vulnerable businesses under renewed pressure, and reinforces the case for sustained support from government on tax, labour, supply chain and many more issues.”