Research
September 11, 2025
Menu Prices
Rising grocery and menu food costs lift consumer inflation in August
Consumer prices rose 0.4% in August, up from 0.2% in July and slightly above expectations. The increase was led by a 0.5% jump in food prices, the fastest monthly gain since November 2022, fueled by higher grocery costs. Restaurant prices rose 0.3% for the second consecutive month, marking seven straight months of solid growth. Energy prices also contributed, rising 0.7%, with gasoline up 1.9%, continuing their recent volatility.
The headline CPI is up 2.9% year-over-year, the highest since January and an uptick from 2.7% in June and July. Core CPI—which excludes food and energy—rose 0.3%, matching July’s pace and meeting forecasts. On a year-over-year basis, core inflation edged up to 3.1%, the highest since February.
Price trends across core categories were mostly higher in August, with notable gains for used cars and trucks (+1.0%), apparel (+0.5%), new vehicles (+0.3%), and shelter (+0.3%). In contrast, medical care commodities (-0.3%) and medical care services (-0.1%) both experienced lower prices in August.
While inflation has ticked higher and further price pressures are anticipated, the Federal Reserve remains attentive to signs of economic cooling, particularly recent labor market weakness. As a result, the Federal Open Market Committee is expected to lower short-term interest rates by 25 basis points at its September 16–17 meeting, marking the first rate cut since December.
Additional rate reductions are projected, with further easing likely at the December 9–10 meeting, and possibly at the October 28–29 meeting as well. Still, uncertainty persists, and the Fed is expected to maintain a data-dependent approach in determining future policy moves.
In the food away from home category, menu prices at fullservice restaurants rose 0.4% in August, following the 0.5% increases seen in both June and July. Over the past 7 months, fullservice menu prices have risen by 0.5% on average per month. In contrast, prices at limited-service restaurants inched up 0.1% for the second straight month in August, with 0.2% growth per month on average since January.
Year-over-year, fullservice menu prices were up 4.6% in August, an acceleration from 4.4% in July and the fastest annual pace since September 2023. Limited-service prices increased 3.2% over the past year, a post-pandemic low. Despite recent gains in fullservice pricing, inflation in both categories has moderated significantly from earlier peaks: fullservice 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 for food at employee sites and schools fell 0.8% in August after soaring by the same rate in July. The July increase had been the strongest since October 2022. At the same time, prices from vending machines edged up 0.1% in August after being unchanged in the prior three months. Prices at other food away from home locations jumped 1.7% in August.
Year-over-year, prices at employee sites and schools increased 5.8% since August 2024. Vending and mobile vendor prices rose 4.8% year-over-year, while the broader “other food away from home” category posted a 5.4% annual increase in August. Regionally, the South posted the fastest menu price growth in August, with prices up 0.4% for the month. Likewise, the South experienced the strongest year-over-year increases in menu prices, up 4.1%, followed closely by 4.0% annual growth in the West and 3.9% in the Northeast. In contrast, menu prices in the Midwest have risen 3.6% over the past 12 months.
The headline CPI is up 2.9% year-over-year, the highest since January and an uptick from 2.7% in June and July. Core CPI—which excludes food and energy—rose 0.3%, matching July’s pace and meeting forecasts. On a year-over-year basis, core inflation edged up to 3.1%, the highest since February.
Price trends across core categories were mostly higher in August, with notable gains for used cars and trucks (+1.0%), apparel (+0.5%), new vehicles (+0.3%), and shelter (+0.3%). In contrast, medical care commodities (-0.3%) and medical care services (-0.1%) both experienced lower prices in August.
While inflation has ticked higher and further price pressures are anticipated, the Federal Reserve remains attentive to signs of economic cooling, particularly recent labor market weakness. As a result, the Federal Open Market Committee is expected to lower short-term interest rates by 25 basis points at its September 16–17 meeting, marking the first rate cut since December.
Additional rate reductions are projected, with further easing likely at the December 9–10 meeting, and possibly at the October 28–29 meeting as well. Still, uncertainty persists, and the Fed is expected to maintain a data-dependent approach in determining future policy moves.
Grocery and menu prices both rose solidly in August
Menu prices rose 0.3% in August, matching July’s increase and continuing a steady upward trend. Over the past seven months, prices for food away from home have climbed at an average monthly pace of 0.4%, pushing the year-over-year CPI for Food Away from Home up 3.9%. While menu inflation remains firm, it is well below the 8.8% peak in March 2023, which marked the fastest pace in over two decades.
Grocery prices also accelerated, rising 0.4% in August (non-seasonally adjusted), up from 0.1% in July. (On a seasonally adjusted basis, grocery prices jumped 0.6%, rebounding from a 0.1% decline the previous month.) Year-over-year, the CPI for Food at Home increased 2.7%, the strongest reading in two years and up from 2.2% in July. Despite August’s solid gain, grocery inflation has eased significantly from its 13.5% peak in August 2022.
In the food away from home category, menu prices at fullservice restaurants rose 0.4% in August, following the 0.5% increases seen in both June and July. Over the past 7 months, fullservice menu prices have risen by 0.5% on average per month. In contrast, prices at limited-service restaurants inched up 0.1% for the second straight month in August, with 0.2% growth per month on average since January.
Year-over-year, fullservice menu prices were up 4.6% in August, an acceleration from 4.4% in July and the fastest annual pace since September 2023. Limited-service prices increased 3.2% over the past year, a post-pandemic low. Despite recent gains in fullservice pricing, inflation in both categories has moderated significantly from earlier peaks: fullservice 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 for food at employee sites and schools fell 0.8% in August after soaring by the same rate in July. The July increase had been the strongest since October 2022. At the same time, prices from vending machines edged up 0.1% in August after being unchanged in the prior three months. Prices at other food away from home locations jumped 1.7% in August.
Year-over-year, prices at employee sites and schools increased 5.8% since August 2024. Vending and mobile vendor prices rose 4.8% year-over-year, while the broader “other food away from home” category posted a 5.4% annual increase in August.
