Food Costs
Wholesale food prices rose sharply in recent months
Average wholesale food prices continued to trend steadily higher in September, 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 – increased 0.8% between August and September.
That represented the fourth consecutive monthly gain – all of which were at least 50 basis points. It also marked the seventh increase in the last eight months. In contrast, the food price index remained essentially unchanged during the preceding 8-month period.
The recent reacceleration of food prices was in sharp contrast to 2023, when restaurant operators were afforded a degree of pricing moderation after the decades-high growth rates of 2021 and 2022.
With the wholesale food price index now trending steadily higher, that pricing relief is quickly evaporating. Average wholesale food prices stood 5.4% above their year-ago level in September. That represented the strongest 12-month increase since February 2023.
It also means average food prices continue to rise well above pre-pandemic levels. As of September 2024, the Producer Price Index for All Foods stood 32% above its February 2020 reading.
The recent upward pressure on wholesale food prices was broad-based across several commodities. Producer prices for eggs (124.3%), confectionary materials (24.4%), butter (17.3%), refined sugar (16.3%), pork (13.1%), milk (7.4%), coffee (6.5%), processed poultry (6.3%) and cheese (5.6%) stood well above their September 2023 levels.
The fresh vegetables index jumped 10.3% during the last 12 months, while the fresh fruits and melons index increased 4.6%.
Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for many restaurants.
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