Restaurant prices are still rising at a faster rate than grocery prices, even as the menu price inflation is more muted than it had been in the past.
Food away from home prices rose 0.4% month over month in September and 6% over the past year, according to data from the U.S. Bureau of Labor Statistics on Thursday. Food at home, the prices customers pay at grocers and other food retailers, increased just 0.1% in the month and 2.4% for the full year—effectively returning to normal after two years of soaring food inflation.
The gap between the two industries was 360 basis points, which could make restaurants seem even more expensive in comparison. That could be a challenge as the economy faces a handful of headwinds, such as student loan repayments and drained pandemic savings.
To be sure, restaurant prices are more muted than they’d been in the past year and a half when soaring costs for food and labor led operators to raise menu prices more than 8% at times.
Full-service restaurants raised prices 0.4% in the month and 5.1% over the past year.
Limited-service restaurants also raised prices 0.4% last month. But they’ve raised prices 6.4% over the past year.
School lunch program inflation, meanwhile, rose 0.3% last month and is up 9.1% for the full year.
Overall, the consumer price index is up 3.7% for the full year. Without food and energy prices, which are more volatile, the index is up 4.1%. Either way, it means restaurant menu prices are increasing at a rate that is faster than inflation.
The U.S. Federal Reserve is paying close attention to the rate of inflation as it considers what to do about interest rates. Its goal is to get the rate down to 2% before it starts cutting rates. But prolonged inflation at 3% or above could force the Fed to raise interest rates further.
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