Price Points

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

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

7 January 2020
coffeedairydrinkgrainsmeet the expertpricingvegetables

Meet the Expert

Who: David Read

What: Chairman

Where: Prestige Purchasing


Food inflation continues to ease with only two of the 10 categories now increasing month-on-month. After a sharp climb in prices during the summer months, the total CGA Prestige Foodservice Price Index is now back exactly where it was last April. The dreaded letter ‘F’ remains the one to watch out for in the near future as fish and fruit prices, whilst falling, are doing so more slowly than we have expected. However, January usually heralds a chunky dive in fish prices, so watch how things are moving closely.

DOWN! Starch contrast

January is of course right in the middle of winter pricing – a period when we expect to see higher prices. And whilst this is particularly true of cabbage, broccoli, parsnips, salads and leeks, we have seen a recent fall in the vegetable index driven mainly by potatoes and onions, where crops have been much better. I expect these decreases to continue into the first few months of the new year, though watch out for the effect of currency fluctuations on imported vegetables.

UP! Coffee may need to move to higher ground

I’ve been commenting for some time on the risk of climate change on coffee productivity, as the bean is highly temperature/moisture sensitive, and growers may be forced to higher ground as the climate warms. The International Coffee Organization (ICO) is reporting some current/future challenges on coffee costs. Factors such as prolonged low international prices, unfavourable weather patterns and specific growing issues with some species are all in the mix. Poor weather has added to a fall in shipments across all regions, with extremely dry environments affecting the harvest in Honduras, Peru and Brazil. With certified stocks falling to the lowest level seen since June 2018, the New York futures market increased by 10.6% while the London futures market climbed 8%.

DOWN! Butter your parsnips now

It’s taken a long time to arrive in foodservice, but we are at last seeing sustained falls in butter prices feeding through, some months after upstream wholesale prices started falling. These falls should continue well into the beginning of 2020. The full oils and fats index fell 2% in the month and almost 10% year-on-year, as rapeseed oil also experienced a price reduction due to demand from the biodiesel industry waning. This drop in demand should endure for the next few months.

ONE TO WATCH! Cereal offender

The UK harvest drew to close at the end of October, and figures show a good harvest generated by favourable growing conditions – particularly when compared to the somewhat strangulated harvest we experienced in 2018. But the weather hasn’t all been good news. Extremely wet weather during the autumn planting window created difficulties for farmers and has resulted in a sharp fall in crop planting. This fall may result in short supply during the 2020 GB harvest. With winter wheat planting down 13%, UK cropping intentions have shifted to spring, and planting is now aimed to increase a whopping 358%. Let’s hope we have the weather to sustain it.

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