Food Costs

Wholesale food prices resumed their steady march higher in January, following a modest downtick in December. The Producer Price Index for All Foods – which represents the change in average prices paid to domestic producers for their output – increased 0.4% between December and January, according to preliminary data from the Bureau of Labor Statistics.

January represented the 9th increase in the last 12 months. Seven of those nine monthly gains were at least 0.5%, and November’s 3.3% increase was the largest single-month increase since May 2020 (+7.8%). 

The steady rise in wholesale food prices during the last 12 months was an abrupt change from 2023, when the price index was flat to slightly lower. That gave restaurant operators a degree of pricing relief after the decades-high growth rates of 2021 and 2022. 

As a result of the steady gains in recent months, average wholesale food prices stood 7.6% above their year-ago level in January. That represented the third consecutive 12-month gain of at least 7%, and the strongest increase since January 2023 (+11.2%).

The recent strong gains pushed the food price index even further above pre-pandemic levels. As of January 2025, 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 (183.7%), confectionary materials (44.7%), beef and veal (14.8%), coffee (14.1%), unprocessed shellfish (12.6%), cheese (8.6%), refined sugar (8.6%), processed poultry (3.7%), milk (3.7%) and soft drinks (3.5%) stood well above their January 2024 levels. 

In contrast, the fresh vegetables index fell 24.2% during the last 12 months, while the fresh fruits and melons index declined 2.4%.

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