Wholesale food prices declined in October
Average wholesale food prices ticked lower 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 – declined 0.4% between September and October.
October marked the continuation of a period of relatively small month-to-month changes in the food price index. Before leveling off in recent months, average wholesale food prices trended sharply lower during the first five months of 2023.
As a result of the declines earlier in 2023, average wholesale food prices stood 3.2% below their year-ago level in October. That represented the sixth consecutive decline on a 12-month basis.
The recent slowing of growth followed an 18-month period of double-digit gains – including a peak increase of 17.7% in April 2022.
While the decades-high growth rates are in the past, average food prices are still well above pre-pandemic levels. As of October 2023, the Producer Price Index for All Foods remained more than 25% 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 beef and veal (27.0%), confectionary materials (15.1%), tea (13.8%), coffee (8.2%), refined sugar (6.4%), soft drinks (5.7%), butter (5.2%) and bakery products (4.9%) stood well above their October 2022 levels. In contrast, the fresh vegetables index fell 47.9% during the last 12 months, while the fresh fruits and melons index was down 18.1%.
Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for many restaurants.