The 'welcome milestone' for the sector follows the largest month-on-month decline ever recorded by the Index of 1.4%.
The softening of inflation has also been seen in the Consumer Price Index (CPI) for food, which indicated only a marginal increase of 0.1% in March. However, the rate in the Foodservice Price Index remains more than double the level of retail, which stands at 4.0% year-on-year.
“After two years of relentlessly high inflation, a fall into single digits in March brings some welcome respite,” says James Ashurst, client director at CGA by NIQ.
“Along with signs of increased consumer demand, it makes us cautiously optimistic for businesses as we move further into 2024. However, high prices in food and elsewhere have caused significant damage, and it may be some time before we achieve sustained low inflation and real-terms sales growth.”
While only one FPI category decreased in price year-on-year in March, all of them recorded a reduction in prices month-on-month, which the Index describes as 'a sign of a fundamental shift in markets'.
Inflationary pressures have also been relieved by an easing in UK wage costs, where real-terms growth fell to 2.9% in February. While an increase in the National Living Wage in April will likely cause a temporary rise in growth, the trend in reduced wage rises is expected to help ease inflation in the months ahead, with the Office for Budget Responsibility (OBR) anticipating the CPI to be at or near the 2% target by the fourth quarter of 2024.
While the latest figures indicate a positive direction for foodservice, the Index notes that the sector continues to navigate potential challenges including the implementation of border checks in the UK, which may contribute to additional supply costs.