Food Costs

Wholesale food prices registered a sizable decline in March, after posting steady gains in recent months. The Producer Price Index for All Foods – which represents the change in average prices paid to domestic producers for their output – fell 2.3% between February and March, according to preliminary data from the Bureau of Labor Statistics.

That followed a sharp 3.7% increase in February – the strongest single-month gain since May 2020 (+7.8%). 

The March decline interrupted a steady upward trend in wholesale food prices. Prior to the March drop, the food price index had risen in 10 of the last 13 months – and 8 of those 10 monthly gains were at least 0.5%.

Even with the decline in March, average wholesale food prices remained 6.6% above their year-ago level. That represented the 5th consecutive 12-month gain of at least 6%, which puts added pressure on restaurant margins with costs in other categories continuing to rise.

The recent upward trend pushed the food price index even further above pre-pandemic levels. As of March 2025, the Producer Price Index for All Foods stood 37% above its February 2020 reading.   

The recent upward pressure on wholesale food prices was broad-based across several commodities. Producer prices for eggs (167.0%), confectionary materials (23.4%), coffee (16.8%), fresh fruit (10.8%), pork (10.1%), unprocessed shellfish (7.4%), cheese (6.0%), milk (2.3%) and beef and veal (1.6%) stood above their March 2024 levels. 

At the same time, there was a degree of pricing relief for some commodities in recent months. The price indices for fresh vegetables (-44%), butter (-17.9%), fats and oils (-5.3%) and wheat flour (-3.9%) were down from year-ago levels.

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