From cost of living to climate change, Alex Gess, our Procurement Business Analyst, shares the latest market conditions impacting food and non-food product availability for Q4 2023 (July – September).
Current Market Conditions
Cost of Living
The most recent financial reports bring encouraging news, as there has been a reduction in the inflation rate from 7.9% in July to 6.7% in August. Consequently, the Bank of England has opted to keep interest rates steady at 5.25%. This comes as a welcome development after a year of high inflation, reaching peaks of 11.1%, which has had a significant impact on essential items.
The decrease in inflation is primarily attributed to falling prices in the hospitality sector, following the end of the UK summer holiday season. This has helped counterbalance the rising costs of oil, leading to positive effects on food prices, which have decreased from 17.4% to 13.6%. In the energy sector, there is some good news with a reduction in the price cap. However, there is concern about the recent rise in fuel costs, which has been driven by policy decisions made by OPEC to limit oil extraction and barrel sales, resulting in a 2% increase in the costs of raw materials and impacting both drivers and consumers.
Climate change
The effects of climate change are becoming increasingly evident, with shifts in UK weather patterns and a rise in extreme weather events globally. In a single year, we’ve witnessed record-breaking weather patterns, experiencing the wettest, hottest, and driest conditions both at home and abroad.
This year, March brought the UK’s wettest month on record, impacting potato crop yields. Then came the hottest September ever recorded, along with a heatwave stretching into October, creating a remarkable start to autumn. To highlight the stark contrasts, while southern UK basked in a heatwave, Scotland endured a month’s worth of rain in just 36 hours.
Global conflicts
The ongoing Ukraine war is a matter of concern for the UK, with no clear resolution in sight, and its impact on trade, freedom of movement, and the refugee crisis is well-documented. The closure of the Black Sea Grain deal this year had significant implications for grain and cooking oil markets, although markets have somewhat adjusted to this major change.
More concerning are recent developments in Israel and its neighbouring regions. Fortunately, our exports from this area are limited, with Turkey handling manufactured and electrical goods and Egypt managing oil and sugar exports. It is expected that these export routes will remain largely free from significant disruptions. However, the conflict will have far-reaching consequences, including displacement of more people and potential unrest due to its religious and historical dimensions.
Read our complete Q4 2023 Market Report
The Pelican’s Market Report provides valuable information on prevailing market conditions, price patterns, product availability, and efficient approaches for managing price fluctuations, menu planning, and exploring alternative product sourcing.
We’re here to help.
If you would like to receive supply chain support or need help navigating the current market trends, please get in touch with us at hello@pelicanprocurement.co.uk. We can assist you with your food and non-food procurement needs.
