US tariffs yet to take effect, as inflation eases

Pub and bar operators will welcome the news that inflationary pressures are continuing to ease, according to new data.

The latest CGA Prestige Foodservice Price Index (FPI) indicates a continued easing of inflationary pressures, with the Index remaining relatively flat in February, falling by a marginal 0.1 point from January 2025.

The data analysts say that the impact of recently imposed US tariffs remains a concern, although their full effect is yet to materialise. CGA predicts there will undoubtably be some volatility, as some imports and exports to and from the United States will start to seek alternative markets.

Year-on-year inflation held steady at 1.8% in February, while month-on-month inflation saw a slight decrease of 0.1%. While this reflects a degree of stability for buyers in the pub and bar sector over the past 12 months, the underlying global economic factors and domestic policy changes present more challenges going forward.

"The inflationary waters in foodservice have been calm lately, but there are several major causes for concern," says Reuben Pullan, senior insight consultant at CGA by NIQ. "Increases in National Insurance Contributions will hit hospitality operators’ margins and are also likely to drive up some prices, while tariff wars will inevitably cause more collateral damage across the sector. Confidence among both consumers and leaders remains hesitant, and businesses will need to stay laser focused on cost management and margins in the months ahead."

Breaking down the categories

The majority of the Index's categories, six out of 10, experienced month-on-month inflation in February. Conversely, only one category out of 10 showed year-on-year deflation. The highest year-on-year inflation was observed in oils and fats at 5.7%, and coffee, tea and cocoa at 6.8%.

After the sharp increases seen in cocoa and coffee prices over the past 12 months, there has been some recent easing, but both commodities still remain at nearly double the average price compared to 2023.

Meat and poultry prices are also under significant upward pressure, with beef prices continuing to trade at record highs, and price rises in chicken being seen due to the Avian Flu outbreak in Poland.

Crude oil prices saw a decline of 4.7% both year-on-year and month-on-month, primarily driven by concerns surrounding economic growth linked to potential tariffs from the US and its trade partners.

Looking ahead, CGA says the associated rise in labour costs will start to filter through the supply chain, adding further upward pressure to food and beverage pricing, as producers and wholesalers adjust to increased overheads. This, coupled with existing pressures on food production costs, suggests that while the current inflation rate is subdued, businesses should remain vigilant for future price increases.

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