Menu prices
Menu prices rose 4.5% during the last 12 months
Growth in menu prices continued to slow in February, according to data from the Bureau of Labor Statistics (BLS). The Consumer Price Index for Food Away from Home increased 4.5% between February 2023 and February 2024. That represented the 11th consecutive month of decelerating growth and the smallest 12-month increase since June 2021.
Grocery store prices also leveled off from their decades-high growth rates of 2022. The Consumer Price Index for Food at Home rose 1.0% between February 2023 and February 2024 – the smallest 12-month gain since June 2021. The recent slowdown was a significant departure from a year-long period of double-digit gains – including a peak 12-month increase of 13.5% in August 2022.
Even though grocery store prices slowed significantly relative to menu prices in recent months, the two price indices registered similar growth from pre-pandemic readings. Between February 2020 and February 2024, menu prices and grocery store prices were both up 25%.
The overall Consumer Price Index rose 3.2% over the past 12 months, inching up from 3.1% year-over-year in January. The core CPI (which excludes food and energy) increased 3.8% year-over-year in February, down from 3.9% year-over-year in January and the slowest pace since May 2021. Overall, core inflation continues to moderate, albeit not as fast as expected. Yet, the uptick in costs in the latest data shows how stubborn prices can be, even with progress over the past year.
For its part, the Federal Open Market Committee is likely to keep interest rates unchanged at the next two meetings on March 19–20 and April 30–May 1. After that, the Federal Reserve is expected to start the process of normalizing rates, perhaps at the June 11–12 meeting if incoming data show sufficient progress.
Within the food-away-from-home sector, limited-service menu prices outpaced the fullservice segment in recent months, although growth rates in both price indices trended steadily lower. Prices for limited-service meals and snacks increased 5.2% between February 2023 and February 2024. That represented the smallest 12-month increase since August 2020.
Fullservice menu prices rose 3.8% between February 2023 and February 2024. That was the smallest 12-month gain since April 2021.
Elsewhere in the food-away-from-home sector, the price index for food from vending machines and mobile vendors increased 7.7% between February 2023 and February 2024. That followed 16th consecutive months of double-digit gains on a 12-month basis.
The price index for food at employee sites and schools increased 3.6% between February 2023 and February 2024. This component had been significantly dampened for much of 2021 and 2022, which BLS attributed to widespread free school lunch programs. As these programs expired, many students went from paying nothing to paying regular prices for school lunches. That resulted in sharp year-over-year increases in this price index during the past year. These base effects are now running their course, which will result in a normalization of this price index as well as its outsized impact on the overall Consumer Price Index for Food Away from Home.
On a regional level, the Northeast (4.9%) and South (4.7%) regions posted the strongest menu price increases between February 2023 and February 2024. Average menu prices in the West (4.4%) and Midwest (3.9%) regions rose at rates below the national average during the last 12 months.
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