Restaurants appear to be slowing down their price hikes as overall inflation cools, at least based on new data released Wednesday by the U.S. Bureau of Labor Statistics.
Food-away-from-home prices rose 0.4% in June and 7.7% year over year as the industry moves away from aggressive price hikes restaurants took in 2022.
The slowdown comes as the overall rate of inflation slowed, too. The Consumer Price Index rose 0.2% in June from May, and 3% year over year. The inflation rate less food and energy prices, which are more volatile, was up 4.8% over the past year.
Restaurants continue to raise prices faster than grocery stores, which could push some lower-income consumers to shift their spending. Food-at-home prices were up 4.7% year over year in June, 300 basis points lower than restaurant inflation.
Still, more restaurants appear to be moving toward more moderate rates of price increases. Limited-service prices are up 7.8% year over year, a slowdown from the 8% price increase a month earlier. Yet they’ve slowed their price increases in each of the past two months.
Full-service prices, meanwhile, are up 6.2% year over year, continuing a gradual slowdown in those price hikes.
The overall inflation number, meanwhile, could prove good news for the U.S. economy, perhaps enabling it to avoid a recession despite rising interest rates and worries about the consumer’s ability to continue spending. While there have been some reports of slowing spending, it has not been nearly enough to push the economy into a recession. And companies continue to create jobs despite reports of layoffs in the technology and financial sectors.
The reports sent stocks up higher on Wednesday. The S&P 500 Index rose 0.74% on Wednesday and most stocks closed higher, led by Domino’s, which was up 11%, largely on news that it is working with the third-party aggregator Uber Eats.
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