Meet the Expert
Who: David Read
Where: Prestige Purchasing
It might sound rather repetitive, but unfortunately prices in most categories are still rising month-on-month – even though food inflation (which compares the cost of food with this time last year) is now beginning to ease. We are predicting that inflation will continue to reduce in the months ahead – just don't expect prices to fall that much, as all that the inflation numbers show is that last year's month-on-month increases were steeper.
UP! Bread costs more dough
Bread and cereal prices are on the rise, and whilst there is always a seasonal trend for price increases at this time of year, poor weather in the US is helping to further firm prices globally. Abnormally large winter storms and flooding from snowmelt has resulted in substantial losses of corn, wheat and barley. As well as damaging existing stocks, there is the prospect of significant delays to spring plantings, meaning the US may look more to imports, strengthening the grains market as a result.
DOWN! Falling fruit a welcome sign
With so many categories rising sharply, it was a welcome relief to see that the largest deflationary movement this month was in fruit, with costs falling back substantially from February levels. Spanish citrus recently suffered from flooding, which has pushed prices up since December. Now, cheaper imported produce from Egypt, Turkey and South Africa is being favoured by buyers – and prices are falling as a result. Expect this to continue in the months ahead.
UP! Pork prices overheating
Be aware that African swine fever is now at epidemic status in China, while in the EU it was recently identified in Belgium. China is both the biggest producer of pig meat in the world and the hungriest consumer. It has experienced massive losses to pig stocks as a result of the disease and has turned to European imports to plug the deficit, firming prices as a result. As a consequence, many pork products in the UK have seen significant increases in price and the future of pork pricing for the remainder of 2019 remains uncertain. It is hard to predict how long this epidemic will persist and whether it will spread further across Europe, but the disease is limited just to wild and domestic pigs, so there is little danger to other species.
UP! Fish now swimming in completely uncharted waters
The increases in fish pricing we saw last month went into double figures percentage-wise, which is pretty much unprecedented for any category. Tightened catch quotas – particularly for cod and haddock – and poor North Sea weather have until now been the main culprits, but adding huge power to the most recent month-on-month increases has been the fact that salmon pricing reached the highest for the year so far. Cod, haddock, salmon and tuna make up the majority of UK fish sales, and whilst we could start to see prices ease as the spring weather allows more access to fishing grounds, we will have to see a slowing down of month-on month price rises before we see falls.
ONE TO WATCH! Big coffee crisis coming down the track?
Demand for coffee is expected to double by 2050, and more than half the world’s suitable coffee land looks likely to be pushed into unsuitability due to climate change. The market growth means that we will need up to 180m more bags of coffee than we are likely to have. The current low trade prices, supported by current surpluses, will probably start to shift as the impact of climate change, pests and diseases hit. In future, prices may also be adversely affected as coffee farmers, based mostly in developing countries, question their choice of crop. Some make a decent living via Fairtrade, but many buyers representing big coffee brands don’t use this system, which has encouraged some growers to ditch coffee for something more profitable. We may look back at 2019 as the year of all-time low coffee prices…