Wholesale food prices trended lower in recent months
Wholesale food prices registered a moderate decline 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 – fell 0.6% between March and April.
April’s decline represented the fourth drop in the last five months. During this 5-month stretch, average wholesale food prices were down nearly 5%.
The current downward trend is a significant departure from the extreme growth rates posted for much of the last 2 years. Average wholesale food prices were just 1.1% above their year-ago level in April – the smallest 12-month increase since January 2021.
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 rear view mirror, average food prices are still well above pre-pandemic levels. As of April 2023, the Producer Price Index for All Foods remained more than 26% 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 (22.0%), milled rice (20.7%), tea (14.4%), soft drinks (11.8%), refined sugar (10.7%), coffee (9.9%) and bakery products (9.1%) stood well above their April 2022 levels. The fresh vegetables index jumped 53.0% during the last 12 months, while the fresh fruits and melons index was up 3.2%.
Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for restaurants.
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