Menu Prices

Consumer prices jumped 0.9% in March, up from 0.3% in February and the largest monthly increase since June 2022. This was largely due to higher gasoline prices, which were up 21.2% due to the war in Iran, with significantly reduced traffic through the Strait of Hormuz. Food prices were unchanged overall, but with menu prices rising 0.2%. Headline inflation increased 3.3% year-over-year in March, up sharply from 2.4% in February and the highest since April 2024.

Core CPI—which excludes food and energy—rose 0.2% in March for the second straight month, and core inflation inched up from 2.5% year-over-year to 2.6%. Price trends across core categories were mixed in March. Notable increases included apparel (+1.0%), transportation services (+0.6%), shelter (+0.3%), and new vehicles (+0.1%). At the same time, prices for medical care commodities (-1.0%), used car vehicles (-0.4%), and household furnishings and supplies (-0.2%), with medical care services prices unchanged.

Inflationary pressures accelerated in March, as expected, with prices likely to continue trending somewhat higher in the near term. This places the Federal Reserve in a difficult position. The labor market continues to show signs of cooling, yet inflation remains stubborn and appears poised to drift higher. As a result, the Federal Open Market Committee is likely to hold policy steady for the foreseeable future. While additional rate cuts remain possible in 2026, they are unlikely to occur before later in the year.
 

Menu prices continued to grow solidly

Menu prices increased by 0.2% in March after rising by 0.3% in February. The average increase in menu prices over the past year has been 0.3% per month. Menu prices have increased 3.8% since March 2025. Overall, menu inflation remains solid, though well below the 8.8% peak seen in March 2023, the fastest rate in over two decades.

In contrast, grocery prices were unchanged in March in seasonally adjusted data. (Using non-seasonally adjusted data, grocery costs fell 0.2%). Over the past year, grocery store prices have also averaged 0.3% growth per month, with 1.9% year-over-year growth overall.  

In the food away from home category, menu prices grew 0.3% at fullservice restaurants for the second straight month, with prices at limited-service establishments up 0.2% in March. Fullservice menu prices have averaged 0.4% growth each month over the past year, up 4.3% since March 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 vending machines and mobile vendors jumped 0.5% in March, while menu prices at employee sites and schools were unchanged for the month. Prices for other food away from home items increased 0.3% in March, easing from the 0.7% gain seen in February.  

Year-over-year, prices at employee sites and schools rose 3.9% since March 2025, with prices at vending and mobile vendors up 3.2%. The broader “other food away from home” category posted a 5.2% annual increase in prices in March year-over-year.     

    

Regionally, menu prices grew 0.4% in the Midwest in March for the second consecutive month, with increases of 0.3% in the South and 0.2% in the West. Menu prices were unchanged in the Northeast for the month. Over the past 12 months, there was little difference between the regions, with year-over-year growth ranging from 3.6% in the South to 3.8% in the Midwest and West to 3.9% in the Northeast.