Prestige Purchasing, the leading food and drink supply chain experts for the Foodservice sector, has announced a reduction in its forecast for food inflation in 2014.
Steep decline in rate of food inflation
In December 2013, Prestige predicted 3.8% for 2014, with a possible range from 6% at the high end to 2% at the lower end. CEO David Read explains:
“We have watched with interest a steep decline in the rate of UK food inflation during 2014. This has been caused by a variety of positive factors including the strengthening of sterling, competitive pressure in the retail sector, and more benign climatic conditions leading to much higher yields in areas like cereals and oils.
“These factors have driven food inflation lower than our model predicted, and in the seven months between October last year and this May we saw food inflation fall from around 4% to a position where prices actually fell year on year.
First sign of increase
“The macro factors of population growth and climate change, coupled with demand pressures from increasing GDP growth have led us to expect the rate of food inflation to start to increase again, and in June we have seen the first sign of this. The challenge now is to predict the speed and rate of this increase.
“We will be continuing to monitor closely, but on balance our forecast for the end of 2014 is now reduced to 2%. Our 2015 forecast will be issued during the next calendar quarter, and we expect this to be above 2014 levels.”
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