Price Points

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

Prestige Purchasing’s chairman, David Read, gives you a glimpse into the financial future.

4 July 2019
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Meet the Expert

Who: David Read

What: Chairman

Where: Prestige Purchasing

 

June’s Foodservice Price Index hit a new highest ever level, whilst at the same time inflation has continued its steady recent fall. It’s counterintuitive, I know, but it can be explained simply: prices are still rising, but generally at a slower rate than was the case last year. As we nervously eye the October 31 Brexit deadline, fluctuations in currency, market supply challenges and the continuing political uncertainty rumble on.

ONE TO WATCH! Summer produce prices drop smaller and later

image credit: Getty Images

Fruit and vegetables, usually so dependable for price reductions at this time of year, both saw unseasonal rises in inflation in the June basket. Poor May weather for salad items in the UK and fruit items in Europe have kept prices higher than usual for this time of year. The UK berry harvest, while promising in yield, may just stay where it is, as reports emerge from UK farms that as many as three out of four picking vacancies are going unfilled. We expect the more recent good weather to improve things, but reductions in price are unlikely to be as large as usual or arrive very fast.

UP! Nothing soft about the rise in soft drinks costs

Inflation in soft drinks is closing on a record 25% increase over this time last year. The past couple of years has been curious for this market, as the impacts of reformulation (brought in by many manufacturers to reduce the impact of the sugar tax), linked to strong consumer demand for premium health and fitness products, and the introduction of more sustainable packaging has changed the shape of the market considerably. Expect this trend to ease, but only slowly.

ONE TO WATCH! Farmed salmon to be unleashed

The Scottish salmon industry has released plans to double the number of farms by 2030. With current production levels already at around 200k tonnes, environmentalists have claimed that this will prove a disaster for wild fish stock in the European, South American and West African waters, as the feed they use contains fish oils that are taken from wild, not farmed, fish stock. Wild fish feed levels are predicted to grow to 770k tonnes, which is almost double the current amount.

Also, the Scottish Environment Protection Agency has announced that it will no longer restrict the size of their farms (currently 2.5k tonnes of fish) if owners agree to reduce chemical, faecal and organic waste pollution around the farms. These dramatic changes will certainly ease salmon prices in years to come, and hopefully do much to stabilise a long-term volatile market.

image credit: Getty Images

UP! All tea-d up

For the first time in a while there is a problem in the tea market, with droughts in Kenya causing a 12% lower yield than predicted. This has driven tea prices higher over the past couple of months. Although Kenya grows over half of the tea imported by Britain, supplies from other countries have the potential to help temper the price increases. However, with a tightening of global supply, other supplying countries look set to benefit from the low stocks by raising prices. There is good news, though, from this year’s coffee production forecast, as it predicts world coffee production for 2018/19 is likely to reach 171m bags, which is 11m bags higher than the previous coffee year of 2017/18.

DOWN! Butter still going soft

An unexpected spike in global butter pricing has now disappeared. The product has continued its long-term downturn over the past month (reflected in UK wholesale prices) and looks set to continue. 

ONE TO WATCH! Here Brexit comes again!

Just in case you thought it had gone away forever, the looming uncertainty that is Brexit (and a potential no-deal one at that) is now racing towards the ‘100 days to go’ milestone. Dust off those contingency plans!

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