From oil markets to food costs: why food price volatility is here again
Overview
The latest inflation figures have confirmed what many across the foodservice industry are already beginning to feel: although, food inflation has dropped slightly, market pressures are continuing to build.
Newly published data shows that annual food inflation reached 1.3% in July. While inflation has remained relatively controlled compared with the food price volatility experienced in recent years, a combination of geopolitical instability, energy market disruption, and ongoing supply chain pressures is now creating fresh challenges for the food industry. As a result, food inflation could approach a figure as high as 8-10% by the end of the year.
Most significantly, continuing tensions involving the United States and Iran around the Strait of Hormuz are contributing to sharp increases in global oil prices. Although a resolution is in sight, nothing is guaranteed.
Disruption to shipping routes through the Strait has created significant uncertainty within global fertiliser markets. The Persian Gulf region plays a major role in worldwide fertiliser production and export, particularly for products such as urea and ammonia, which are essential for agricultural production. Any restriction to supply routes has the potential to impact fertiliser availability and pricing globally, adding further pressure to food production costs over time.
Instability in the Middle East has created uncertainty across global energy markets, impacting fuel, transport, packaging, fertiliser production, and ultimately food manufacturing and distribution costs.
Why global events create food price volatility
Food pricing in the UK is heavily influenced by international events. The food supply chain is global, interconnected, and highly sensitive to disruption. Events such as geopolitical conflict, energy shortages, poor harvests, shipping disruption, or currency volatility can all trigger what is known as force majeure pressures across the market.
When oil prices rise, the impact extends far beyond fuel alone:
- Distribution and logistics costs increase
- Agricultural production costs rise due to fertiliser and energy usage
- Manufacturing and packaging become more expensive
- Imported goods and ingredients face additional transportation pressures
- Suppliers experience increased operational costs throughout the supply chain
These pressures often move quickly through foodservice markets and can result in sustained price increases across multiple categories.
Volatile price lines will be experiencing increases over the summer, resulting in some out-of-window price rises owing to force majeure factors.
Industry analysts are now warning that, at mentioned at the top of this piece, should current conditions continue food inflation could approach 10% by the end of the year.
How allmanhall have worked to protect clients
Protecting clients from unnecessary cost pressure is central to what allmanhall do. While food price volatility cannot always be avoided, our role is to ensure clients benefit from our expert procurement strategy and strong supplier relationships that help reduce the impact wherever possible.
Throughout this challenging trading environment, our experienced buyers and analysts have worked continuously behind the scenes to shield clients from inflationary pressures for as long as possible.
You may recall that in April 2026, despite widespread expectations of inflationary increases across the sector, we were able to maintain – and in many cases reduce – prices.
Our team successfully mitigated anticipated price increases in the April window by negotiating supplier proposals down by an average of 1.5%, on a weighted basket, on behalf of our clients. For example, where 1.5% was proposed by suppliers, we achieved 0% increase. In some cases, we even achieved a price decrease!
This was not achieved by chance. It was the result of our leveraged purchase volumes, of challenging supplier proposals line by line, and using real-time market intelligence and procurement expertise to secure the strongest possible outcomes for our clients.
In a market where many organisations experienced significant inflationary increases, allmanhall clients benefited from an outcome that outperformed wider CPI inflation figures and delivered measurable value at a critical time.
This is exactly where allmanhall’s expertise makes a difference.
Combining data, market insight, technology, and human expertise, we help clients maintain control, visibility, and confidence in highly challenging market conditions.
Whilst the next price window is likely to see some unavoidable and, in some cases, force majeure related price increases, we’ve already staved off increases this year for 6 months, helping clients manage food spend.
We advise anyone managing food budgets to expect the September window to be impactful and plan for up to a 4-8% YoY inflationary increase. We are constantly monitoring the situation and will keep you updated. Now more than ever, the support of expert negotiators and category buyers is essential.
We appreciate that any increase creates additional pressure for catering operations, budgets, and menu planning. Please be assured that allmanhall will continue to challenge supplier increases wherever possible to help you make informed, commercially sustainable decisions.
Our teams continue to work closely with suppliers and manufacturers to secure the best possible outcomes while maintaining product quality, availability, and service standards, giving you confidence that food price volatility and inflation are being mitigated and managed on your behalf.
Jo Hall, allmanhall’s Co-owner & Managing Director, concludes by saying:
“Catering teams and foodservice operators are already balancing tight budgets, labour pressures and sustainability commitments. Global shocks like this reinforce the importance of proactive procurement and forward planning. It’s not just about reacting to rising prices – it’s about using insight, forecasting and collaboration to protect both quality and financial stability for the long term. We’re here to help.