Price Points

Cost watch: what’s going up and what’s going down in December

David Read, Prestige Purchasing’s chairman, takes us through the main moves in food prices this month.

11 December 2019
dairyfruitmeatmeet the expertpricingseafood

Meet the Expert

Who: David Read

What: Chairman

Where: Prestige Purchasing

 

Food inflation continues to ease and prices in most categories are now falling month-on-month. In my last article, I suggested that chefs and buyers should write a large letter ‘F’ near their order pads, as a reminder to keep a sharp eye on fish and fruit prices during November and December. Don’t get the rubber out yet, as these remain the problem categories this month too. 

UP! Worst of the swine flu fever yet to be felt on meat markets

Monthly UK clean pig slaughters are now topping 1m head due to increased demand – allowing farmers the freedom to adapt to demand as pork shortages in Asia continue to increase exports from Europe. As we move into the New Year, expect to see this trend continuing and prices rising accordingly. And with Christmas approaching fast, it’s also the peak time of the year for selling beef, which will push prices upwards. Chinese government officials have agreed (for the first time in 20 years) to lift a ban on importing beef from the UK. Shipments are expected by the end of the year, with the deal estimated to be worth circa £230m in the first five years. This will probably end the relatively settled market in UK beef.

UP! The wrong climate for fruit

We rely heavily on imports of fresh fruit to get our winter dose of vitamin C, so prices usually rise at this time of year. But problems with weather and labour are pushing prices much higher than usual. Early frosts in Poland have hit fruit production by 40% to 50%. Elsewhere, recent high global demand for avocados is leaving growers short on supply this month, which has resulted in a dramatic rise in price. The demand has particularly impacted Hass avocados and high-quality ‘ready to eat’ crops which have been hit by supply issues from South Africa and Chile, where crop yields have been down 30% and 25% respectively. The price of avocados is expected to remain high, so the trendy avocado and bacon on toast looks likely to need a retail price rise.

DOWN! Farmgate dairy pricing feeding through

The dairy category continues to fall month-on-month as the wholesale market slowly realigns with farmgate pricing. While prices remain higher overall than this time last year, there are promising signs that wholesale pricing is starting to benefit from the high production volumes seen during much of 2019, and this should continue. The cheddar market remains stable, but we have heard that processor margins have been declining due to a decrease in the value of by-products such a whey powder and whey butter. This, combined with a rise in exports this year of 9.1% (Jan-Sept), means UK cheddar pricing may well start to increase into next year. Elsewhere, the number of eggs being packed is increasing, leading to a 2.6% decrease in price for UK farmgate eggs.

UP! Shelling out yet more for our fish

Fish is still in double digit inflation (as a percentage). This doesn’t come as a major surprise when one considers that 70% of the worlds fish stocks are either fully or over-utilised. But currency exchange rates haven’t helped either as we import about three-quarters of the fish we eat. Watch salmon pricing carefully in the run up to Christmas as this will be under pressure due to a decline in Scottish harvests and volume restrictions being enforced by Norwegian farmers. On the plus side, better weather than expected in the North East Atlantic has seen an increase in the quality and size of the cod and haddock catches, which will help pricing in the short term. Quotas for cod and haddock in 2020 have been raised too, which will also ease the cost of fish and chips.

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