Prices consumers paid for food away from home increased 8.5% year over year in September, according to new federal data released on Thursday, as the end of many free school lunch programs obscured a moderation in the rate restaurants are increasing menu prices.
Yet overall inflation rose 8.2% last month, driven by higher prices consumers are paying for food at the grocery store and for housing. That rate was faster than expected and will likely keep the U.S. Federal Reserve raising interest rates and has sent stock prices lower on Thursday.
Food at home prices rose 13% over the past year, driven by higher costs for everything from breakfast cereal (up 24%) to butter (up 32%).
But the CPI for all items outside of food and energy rose 6.6% over the past year, the highest rate since 1982.
Restaurants, however, appeared to slow the rate of menu price increases last month amid growing concern about the consumer’s willingness to continue dining out with prices up at historically high rates, even with other prices rising faster.
Full-service prices rose 0.4% last month, half the rate of August. For the year, full-service restaurant meals are up 8.8%, a slowdown from the 9% in August.
At limited-service restaurants, prices moderated more slowly, rising 0.6%, down from 0.7% in August. For the year, prices are up 7.1% at chains like McDonald’s and Panera Bread.
Driving higher food-away-from-home prices has been the end of many free school lunch programs that have sent prices at schools and employee sites soaring. Those prices rose 45% in September and 91% over the past year.
While restaurants may be slowing their rate of increases, they are still increasing prices at remarkably high rates. There are growing indications that consumers are shifting their spending to adjust for these higher prices, eating out less, getting more value items or dining out at chains like McDonald’s.
(Read about consumers’ pricing breaking point.)
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