Operations

Inflation eases, but not at fast-food restaurants

Limited-service menu prices rose 6.2% over the past year, according to new federal data, and continue to rise at a rate much faster than overall inflation.
menu price inflation
Restaurant menu prices continue to rise faster than the rate of inflation. | Photo: Shutterstock.

The good news for U.S. consumers is that prices are easing as nearly two years of higher interest rates appear to be finally cooling the brutal inflation that marked the post-pandemic period.

You can’t necessarily tell by looking at fast-food restaurants.

Menu prices at restaurants and other foodservice companies rose 0.4% last month, and 5.4% for the year, according to data from the U.S. Bureau of Labor Statistics released on Tuesday. Both numbers were higher than overall inflation and higher than grocery price inflation.

Consumer prices were flat for the month, an encouraging sign after more than two years of historic price increases. For the past 12 months, consumer prices are up 3.2%.

Prices for food at retail and other establishments rose 0.3% in October, and 2.1% for the year.

The most aggressive price increases appear to be taking place at fast-food restaurants. Prices at limited-service restaurants rose 0.5% last month, and 6.2% over the past year. That is lower than the annual rate of price increases that have marked the past two years but remains elevated compared with historic rates and higher than many other consumer prices.

That could be a sign that fast-food restaurants feel they can raise prices or need to given their own inflation rates. Full-service restaurants, where demand has slowed this year, raised prices 0.3% last month and 4.3% over the past year.

The inflation for fast-food restaurants could become a challenge in the coming months if consumers start seeing them as less of a bargain than they are accustomed to. “They’re spending too much on food,” Carlos Herrera, chief economist at Coca-Cola North America, said at the Global Restaurant Leadership Conference last week. “Inflation on food away from home is higher than total inflation.”

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