Beacon has your back as food prices surge
Updated: Nov 22, 2021
Global shoppers feel the pinch of rising food prices, with emerging economies bearing most of the brunt. In today's blog article, we look at what's caused the most significant jump in ten years, the effect this has on the UK and what Beacon is doing to minimise the impact on our customers.
Supply chain disruption, high commodity prices, production site closures and political tensions have caused global food prices to reach the highest level in over a decade. The Food and Agriculture Organisation's Food Price Index (FFPI), a measure of the monthly change in international prices of a basket of food commodities, has shown that food prices have risen by a massive 30%.
The Index highlighted the surging cost of cereals and vegetable oils across the globe, with the latter soaring by almost 10% last month. Wheat prices were also up 40% due to poor harvests from the world's leading exporters. And on top of that, palm oil prices rose for a fourth consecutive month in October because of ongoing migrant labour shortages in Malaysia.
Although emerging economies are bearing the brunt of the rises, the impact affects all world markets, including the UK. Kantar has suggested that prices are increasing at the fastest rate since August 2020, with grocery inflation rising to 2.1% in October – the highest rate since retailers cut promotions due to the impact of the pandemic.
The fastest rising food prices include savoury snacks, canned cola and crisps, with the latter's supply further disrupted after an IT glitch hit the world's largest crisps factory. The noticeable absence of some of the nation's favourite snack products led Walkers to reveal that an IT upgrade had affected the manufacture of its products. This decrease in production is forecast to continue until the end of November. However, it's not all doom and gloom, as some products have seen a slight fall in price, including fresh bacon and vegetables.
Although the Bank of England confounded market expectations by holding interest rates last week, with inflation heading for 5%, a BoE policymaker has warned of looming rate rises. Beacon Procurement Director Clare O'Brien, comments 'The increase in global food prices, inflationary pressures and mounting energy bills, mean that most firms will need to factor the likelihood of continued price pressures on their plans for many months to come yet.
However, I'd like to reassure our customers that Beacon continues to work hard to minimise the impact these rising costs may have on their businesses. We have a stringent process in place to manage any price change requests from our supply partners, even during periods of extreme market volatility such as what we're seeing now. This work includes investigating the reasons given for the price change and whether they stand up to scrutiny. If the increase is unavoidable, we proactively look for ways to mitigate the impact to our customers before agreeing to the rise, whether this is through product swaps, menu reengineering or in some extreme cases alternative supplier sourcing.'
If you're worried about the rising costs of your food and beverage overheads, speak to your Beacon Procurement Services Manager or get in touch with our Customer Support team via Live Chat. We're here to support you in unlocking savings and improving your profitability without impacting quality or the customer experience. Talk to us now. Our advice is entirely free of charge, which means you have nothing to lose even if your costs are already tightly controlled.