Growth in wholesale food prices picked up speed in October
After 2 months of moderation, wholesale food prices resumed their upward trajectory in October, 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 0.9% between September and October.
October’s healthy increase represented the strongest monthly gain since July – and came on the heels of a 0.8% decline in August and a 0.1% gain in September.
While the gains were somewhat dampened in recent months, the trendline for much of the last 2 years was steadily higher. Average wholesale food prices rose in 17 of the last 22 months. Thirteen of those monthly gains were above 1%.
As a result of the steady growth in recent months, average wholesale food prices stood 12.5% above their year-ago level in October. While this was down from the sharp 17.7% increase posted between April 2021 and April 2022, it represented the 15th consecutive month with double-digit gains on a 12-month basis.
Although prices for some food commodities leveled off or declined in recent months, others continued to trend sharply higher. As a result, the degree to which restaurants are experiencing relief depends on the menu mix of each individual operation.
Producer prices for eggs (204.2%), butter (80.8%), milled rice (21.3%), milk (20.9%), confectionary materials (15.2%), soft drinks (14.7%), cheese (13.7%), coffee (13.0%), flour (12.2%) and refined sugar (10.5%) stood well above their October 2021 level. The fresh vegetables index jumped 57.6% during the last 12 months, while the fresh fruits and melons index was up 34.5%.
Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for restaurants – particularly when customer traffic remains below pre-pandemic levels for many operations.