Food Costs
Wholesale food prices rose for the third consecutive month.
Average wholesale food prices continued to trend higher in April, according to preliminary data from the Bureau of Labor Statistics. The Producer Price Index for All Foods – which represents the change in average prices paid to domestic producers for their output – increased 0.4% between March and April.
April’s increase followed stronger gains in February (+1.4%) and March (+0.8%), and represented the first time since late-2022 that the price index posted 3 consecutive monthly gains.
Prior to the current 3-month trend higher, average wholesale food prices had remained relatively flat during the previous 8 months.
As a result of the recent gains, average wholesale food prices stood 1.7% above their year-ago level in April. That marked the third consecutive increase on a 12-month basis, after posting 9 consecutive year-over-year declines.
Although food prices turned higher during the last 3 months, the growth remained relatively modest compared to the recent 18-month period of double-digit gains – including a peak increase of 17.7% in April 2022.
While the decades-high growth rates will likely not return in 2024, average food prices are still well above pre-pandemic levels. As of April 2024, the Producer Price Index for All Foods stood 29% above its February 2020 reading.
Although prices for many food commodities leveled off or declined in recent months, others continued to trend higher. As a result, the degree to which restaurants are experiencing relief depends on the menu mix of each individual operation.
Producer prices for confectionary materials (25.0%), butter (23.9%), refined sugar (18.5%), pork (18.3%), unprocessed finfish (15.1%), eggs (11.7%), beef and veal (10.8%), soft drinks (5.5%) and coffee (5.4%) stood well above their April 2023 levels. In contrast, the fresh vegetables index fell 12.8% during the last 12 months, while the fresh fruits and melons index declined 7.5%.
Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for many restaurants.
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