Fuel and food prices slow inflation to 7.9% in June
UK inflation slowed to 7.9% in June, the lowest level since March 2022, according to the Office for National Statistics (ONS).
The rate of price rises slowed more than expected in the 12 months to June, with falling fuel prices contributing to the slow-down, while food prices rose less quickly than in June 2022.
While the drop is welcomed, UK inflation is still high and far off Prime Minister Rishi Sunak's target of halving the rate from around 10.7% in January.
Ed Bignold, managing director of Alvarez & Marsal's corporate transformation services, noted the hospitality industry is entering one of the "golden periods" of the year. "A slight drop in the pace of increasing restaurant and hotel prices is a welcome development for both the sector and consumers. This follows yesterday's news that in recent weeks, supermarkets have charted the most significant fall in checkout costs since grocery inflation peaked in March.
He said: "As international travel becomes increasingly expensive, more Brits are expected to opt for staycations this summer. This may help sustain footfall in the UK's restaurants, pubs and bars, and keep hotels at higher occupancy for longer.
"Nevertheless, the industry continues to be squeezed by input cost inflation and elevated wages, which show no signs of abating. Further pressure on consumers, particularly those facing rising mortgage costs, could dampen demand in the sector. With margins still under significant pressure, the coming months will be absolutely critical in ensuring the continued viability of many businesses in the sector."
Meanwhile, CGA's latest Business Confidence survey suggested half of senior-level hospitality operators are now "very concerned about inflation in food and drink prices".
The majority of operators have seen increases in the price of eggs (85%) and chicken (80%), and nearly as many have experienced hikes in the cost of beer (79%) and red wine (74%).
The survey from CGA by NIQ and Fourth said operators have been forced to pass on some price increases to consumers, with food menu prices increasing by an average of 13% over the last year.
Karl Chessell, CGA by NIQ's director, hospitality operators and food, EMEA, said: "These figures are the clearest evidence yet of the impact of cost pressures on hospitality.
"This is a resilient and resourceful sector and businesses have steadily built back from the turmoil of Covid-19 but relentless inflation means many of them are now operating on extremely tight margins. Rising prices throughout the food and drink supply chain and enforced increases in pay levels have left few companies unscathed, and some are now very fragile.
He added: "Hospitality's long-term outlook remains good. Consumers are keen to eat and drink out when spending allows, and there are some signs that inflation may ease in the second half of 2023. However, in the meantime the sector needs targeted support on tax, energy, labour and other areas if it is to help power the UK's much-needed economic recovery."
