Food Costs

Growth in wholesale food prices accelerated during the second half of 2024, despite a modest decline in December. The Producer Price Index for All Foods – which represents the change in average prices paid to domestic producers for their output – edged down 0.3% between November and December, according to preliminary data from the Bureau of Labor Statistics.

December’s downtick came on the heels of a 3.4% jump in November – the strongest single-month increase since May 2020 (+7.8%). 

In total for 2024, wholesale food prices rose in eight of the 12 months. Seven of those eight monthly gains were at least 0.5%. 

The sharp upturn in wholesale food prices was a significant departure from 2023, when the price index was flat to slightly lower. That afforded restaurant operators a degree of relief after the decades-high growth rates of 2021 and 2022. 

As a result of the steady gains in 2024, average wholesale food prices stood 7.0% above their year-ago level in December. That represented the second consecutive 12-month gain of at least 7%.

The strong gains of 2024 pushed the food price index even further above pre-pandemic levels. As of December 2024, the Producer Price Index for All Foods stood 35% above its February 2020 reading.  

The recent upward pressure on wholesale food prices was broad-based across several commodities. Producer prices for eggs (134.5%), confectionary materials (49.0%), unprocessed finfish (19.6%), unprocessed shellfish (15.4%), coffee (13.1%), refined sugar (11.6%), beef and veal (6.2%), soft drinks (5.5%), cheese (4.5%) and processed poultry (4.4%) stood well above their December 2023 levels. 

The fresh vegetables index jumped 27.5% during the last 12 months, while the fresh fruits and melons index increased 17.3%.

Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for many restaurants.