Food Costs
Wholesale food prices jumped 1.3% in March
Average wholesale food prices rose sharply for the second consecutive month, 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 – jumped 1.3% between February and March.
The March increase came on the heels of an even stronger 1.5% gain in February. Prior to the sharp increases in February and March, 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 1.4% above their year-ago level in March – similar to February’s 12-month growth rate (1.3%). That followed 9 consecutive declines on a 12-month basis.
Although food prices turned higher during the last 2 months, the growth was 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 March 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 butter (18.7%), refined sugar (18.2%), confectionary materials (14.6%), beef and veal (12.4%), pork (7.8%), coffee (6.9%), unprocessed shellfish (6.5%) and processed poultry (6.2%) stood well above their March 2023 levels. The fresh vegetables index jumped 86.1% during the last 12 months, while the fresh fruits and melons index rose 5.6%.
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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