Category Insights & Outlook 2023




Food & Agriculture

We have seen a steep rise in core food commodity prices over the past two years as a result of supply shortages.

This rise was caused primarily by the domino effect of COVID-19 pandemic disruptions, supply chain issues, the Russia-Ukraine conflict, and rising interest rates – all contributing to the cost of living crisis.​

High inflation rates for food in 2022 are expected to continue and peak in Q1/Q2 of 2023, with inflation rates expected to stabilise in Q3/Q4 of 2023, according to Morgan Stanley.​

Rising food costs are expected to significantly impact household budgets, with subsequent knock-on effects on consumer spending across all sectors, compounding the impacts of the recession.

Future outlook

In the short term, food prices will continue their upward trajectory, with inflation reaching 17-19% during Q1/Q2 of 2023 before beginning to subside over the next 12 months – inflation rates settling at 11% by Q4 – according to Morgan Stanley.

Short term outlook

High levels of food price inflation are expected due to: ​

  • Rising interest rates and energy prices putting pressure on producer and distributor margins​.
  • Continued supply shortages due to geopolitical tensions, supply chain pressures, and adverse weather conditions​.

Medium term outlook

Food price inflation is expected to stabilise in the second half of 2023 onwards​:

  • Interest rates are expected to stabilise, leading to higher confidence in both the supply and demand sides of markets.​
  • Tensions between Russia and Ukraine are expected to level off in 2023, reducing supply pressures from key raw materials.​
  • Nonetheless, we expect to see continued impact from climate change and supply chain pressures.​

Key takeaways

Immediate actions:

Focus on demand reduction and specification optimisation in the short term as high levels of inflation and economic downturn are placing pressure on consumers and increasing price sensitivity in demand markets​.

Best practices

Adopt a holistic view on procurement tools. This may include financial instruments, sustainability and innovation networks, and joint partnership approaches with suppliers to ensure supply stability and continuity in the long term​.

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Category Insights & Outlook 2023

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How Efficio can help

If your business is or has been impacted by any of these trends, or you would like to dive deeper into the outlook and associated guidance for any of the above categories, our SMEs are available to help.

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