H & C News is pleased to be able to share information on food costs and trends for May – from fruit and vegetables, to meat and fish, to dairy – supplied by Prestige Purchasing.
Overview
Overall CPI for the UK has dropped from 2.8% at last month to 2.4% this month, which is an encouraging sign.
Food inflation has risen 1.2% from 3.8% to 5.0% from March to April and is currently tracking higher than expected for 2013. However, we are expecting the headline figure to drop back a little next month. This is because the April 2012 number (against which this month’s figure is compared to give a picture of inflation) was particularly low, exacerbating the effect of an increase in prices from March to April this year.
Having said that, almost all food categories increased in price this month, fish being the only category that did not. The largest increases were seen in oils and fats and sugar products.
This Month’s Highlights
Fresh Produce
- The apple and pear market has been somewhat quiet this month, with only a few price changes occurring. Apple prices have remained particularly stable, with the main exception being the pink lady variety which has increased in price. We are seeing more consistency in prices this month as the domestic growing season picks up. As with apples, pears have been relatively stable, with only the conference variety really experiencing any price change, increasing this month.
- In the berry market, we are seeing variances; with blackberries (-57%), blueberries (-7%) and redcurrants (-24%) all decreasing since the start of April. Raspberries have fluctuated around the £12/kg mark, whilst strawberries – which can now be more locally sourced – have more than doubled in price this month. We are seeing the increase in strawberry prices due to the Spanish growing season coming to an end, and growers are struggling to maintain quality whilst we wait on the Belgian growing season to kick off.
- Potatoes have, generally, increased the past month by almost 15%, with both Markies and Agria frying potatoes increasing the most by 20%, whilst King Edward potatoes experienced a decrease in price this month (-2.5%).
We are still living in the aftermath of the appalling winter and spring we have seen in the past six months or so – and we are all too aware of the effect the rain, snow and bitterly cold weather has had on crop quality and quantity. As such, it is becoming more difficult to source potatoes of higher qualities, specifically with reference to frying varieties.It is hoped we will see things improve in the near future as many regions around the UK have finished, or are close to finishing, the plantation of the new season’s crops.
- The price of onions has seen an increase this month (+17%) as we see the Spanish growing season coming to an end and we move towards the more expensive Chilean market. For more price stability, choose the Dutch onion. Courgettes have also seen a large jump up in price (+65%) and this is a result of the cold snap experienced lately which has reduced available supplies. Leeks (-42%) and Cauliflowers (-70%) however have fallen in price this month as supply and quality begin to improve.
- Beef prices have seen an increase across the board. Top quality steer prices have increased the most (+2.6%) and cow prices the least (+1.3%). This is due to high levels of demand for supply, reducing available resources, which has pushed prices up, albeit not at as steep a rate as we have seen recently.
- Lamb prices have seen an increase this month, with UK lamb going up by over 8% this month (higher than the EU average of 5%, where prices remain lower than those of the UK). Although New Season lamb has now hit the market, the swap over from Old Season to New Season is still a few weeks away, especially as the volume of New Season lambs we are currently seeing is lower than expected.
- The price of pork has also seen a rise this month (2.5%), which has been brought about by a combination of poor weather and higher average carcass weights than we are used to seeing for this time of year.
- Chicken prices have been up and down this month; broiler chicken (all weights) has increased by around 6.2% last month, whilst chicken breast prices have fallen this month, and chicken leg has remained stable. These fluctuations are relatively typical for chicken, but the increase to broiler prices can partly be attributed to higher demand levels for domestic chicken.
- Farmgate milk prices have remained steady this month, but consumer prices saw an increase at the start of April before stabilising due to a poor start to milk production at the start of the year being reflected in current market prices. The increases we have seen this year are a direct result of low supply levels, however it is thought that prices may drop slightly in coming weeks attributable to buyers challenging the current high prices; dairy processors, on the other hand, have been warned they will need to push their payments up to 35p/litre to secure supplies in a bid to offset the higher production costs.
- Butter prices have shot up across April by almost 25%, and wholesale prices have equally jumped up by around the 20% mark – and are currently over 50% higher year-on-year. This is highly attributable to milk yields which have seen a decrease of nearly 10% due to the very cold and wet – and unexpected – weather we have been experiencing as of late.
Now, apologies for using industry jargon, but the biggest concern in terms of butter pricing at the moment is supply. Adding more pressure on the domestic market is the on-going competition between current sales* and PSA (Private Storage Aid)* sales. PSA sales began trading at the start of March, but with volume levels this year predominantly lower than sellers have seen in previous years, this is resulting in prices remaining high.For clarity, when we refer to Current Sales we mean those at a consumer level, based on butter that is currently being produced. When we refer to PSA (Private Storage Aid) Sales, we are talking about butter produced last Autumn and stored over the winter.Over the coming months butter prices are not looking set to change their trends, and prices are predicted to continue increasing well into the summer as the poor weather continues and supplies remain low.
- Cheddar cheeses have remained stable since April, as have Gouda and Edam cheese, whilst Mozzarella cheese (+10%), Parmesan (+1.3%) and Gorgonzola (+5%) cheese have all gone up this month.
- Egg prices are beginning to stabilise again after significant fluctuations following the New Year period, but still remain relatively high. This is attributable to the current surplus supplies on the market, which has also been made worse by a decline in consumer demand at both a retail and a wholesale level.
Fish and Seafood
- Cod has fallen by 15% across April as a result of more consistent supplies reaching the market following on from the favourable results at the last quota meeting.
- Haddock has shot up in price across April, doubling in price as a result of much lower catch volumes than we were expecting last month. Haddock is a very variable fish, price wise, and is highly dependent on catch volumes which have been very unpredictable as of late due to varying current temperatures causing the fish to migrate.
- Salmon (farmed) has risen by nearly 10% across the past month, and is predominantly attributable to the increase in Norwegian export prices, which is a key player in dictating general prices. These prices were pushed up as demand for the fish outstripped supply.
- The price of prawn (based on coldwater, Norwegian 241-320 variety) has increased slightly this month (+2%), and prices still sit at a higher level than the average for 2012. This has not been helped as Scottish fishermen also found out they have had a day cut from their fishing quota too, which could help keep prices up.
About Prestige Purchasing: independent, reliable and verified insight
Prestige Purchasing is a specialist consultancy practice helping Foodservice and Hospitality businesses develop excellent supply chains. This is undertaken for every type and size of organisation by applying the very best professional techniques with clients. Prestige is different because money is earned only from clients and Prestige is therefore truly independent. There is no hidden agenda; Prestige works only for you, 100% of the time. And recognises that the way in which your supply chain delivers Quality, Availability and Innovation is every bit as critical as the management of Cost. Prestige does all the leg work, employing a research team that uses over 400 sources of data and information every month to produce unbiased, independent reports.
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