Menu Prices
Core CPI—which excludes food and energy—also rose 0.2% in February and was up 2.5% over the past year. That year-over-year pace was unchanged from January and marked the slowest core inflation reading since March 2021.
Price trends across core categories were mixed in February. Notable increases included apparel (+1.3%), medical care services (+0.6%), household furnishings and supplies (+0.2%) and shelter (+0.2%). At the same time, used cars and truck prices (-0.4%) continued to decline, while costs for medical care commodities and new vehicles were unchanged.
While core inflation continues to run slightly above the Federal Reserve’s stated 2% long-run objective, there has been tremendous progress over the past couple of years to decelerate consumer prices from the highly accelerated paces seen in 2022. For now, the Federal Reserve remains more concerned about a cooling labor market than inflation pressures, and this report will reinforce that view. With that said, there are expectations that costs might rise in the short term due to higher energy costs related to the conflict in Iran.
Looking ahead, the Fed is expected to maintain its data‑dependent stance in shaping monetary policy. The Federal Open Market Committee is poised to potentially cut the federal funds rate again in 2026, but it seems unlikely to do so until later this year. Incoming data will help to frame the timing of any possible cut.
Grocery price growth outstripped menu prices in February
Menu prices increased by 0.3% in February after edging up by 0.1% in January. That was consistent with the average monthly gain experienced over the past year, with menu prices rising 3.9% since February 2025. Overall, menu inflation remains firm, though well below the 8.8% peak seen in March 2023, the fastest rate in over two decades.
In contrast, grocery prices grew 0.5% in February. Since August, grocery store prices have averaged 0.5% per month, all solid increases, with 2.4% year-over-year growth overall.
In the food away from home category, menu prices grew 0.3% at both fullservice and limited-service restaurants in February. Fullservice menu prices have averaged 0.4% growth each month over the past year, up 4.6% since February 2025. At the same time, limited-service menu prices increased 0.3% on average per month over that same period, up 3.2% year-over-year.
Inflation in both segments has moderated significantly from earlier peaks: full-service restaurant prices surged as high as 9.0% year-over-year in 2022, while limited-service prices peaked at 8.2% in April 2023.
Within the broader food-away-from-home category, prices at employee sites and schools jumped 0.5% in February with menu prices at vending machines and mobile vendors inching up 0.1% for the second straight month. Prices for other food away from home items increased sharply, up 0.7% in February, the largest monthly increase since August.
Year-over-year, prices at vending and mobile vendors rose 4.7% since February 2025, with prices for food at employee sites and schools increasing by 3.9%. The broader “other food away from home” category posted a 5.0% annual increase in prices in January year-over-year.
Regionally, menu prices grew 0.4% in both the Midwest and Northeast in February, with increases of 0.3% in the West and 0.2% in the South. Over the past 12 months, the Northeast (+4.3%) and West (4.0%) experienced the fastest menu price growth, with the Midwest (+3.8%) and the South (+3.7%) not far behind.
