Menu Prices
Core CPI—which excludes food and energy—increased 0.2% in December, with 2.6% growth seen over the past 12 months, mirroring the rate seen in November and continuing to be the slowest pace since March 2021.
Price trends across core categories were mostly higher in December. Notable increases included apparel (+0.6%), household furnishings and supplies (+0.5%), transportation services (+0.5%), medical care services (+0.4%), shelter (+0.4%), and medical care commodities (+0.3%). At the same time, prices for used cars and trucks declined 1.1%, with new vehicle costs unchanged for the month.
While core inflation continues to run somewhat 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 it was for that reason that the Federal Open Market Committee lowered short-term interest rates at its last three meetings.
Looking ahead, the Fed is expected to maintain its data‑dependent stance in shaping monetary policy. The FOMC is poised to cut the federal funds rate again in 2026, but it seems unlikely to make a move at its upcoming January 27–28 meeting. Incoming data will help to frame to possibility of a cut at the March 17–18 meeting, which appears more likely in our view.
Menu and grocery prices both rose solidly in December
Menu prices jumped 0.7% in December, the fastest monthly growth since October 2022. There was no monthly data in October and November. In 2025, prices for food away from home averaged monthly growth of 0.4%. On a year-over-year basis, menu prices have risen 4.1% since December 2024, the highest year-over-year growth rate since July 2024. As such, menu inflation remains firm, though well below the 8.8% peak seen in March 2023, the fastest rate in over two decades.
Grocery prices increased 0.5% in December using seasonally adjusted data, the same rate as in September. (In non-seasonally adjusted data, food purchased for the home was up 0.7%.) Grocery prices averaged 0.3% growth per month in 2025. The CPI for food at home rose 2.4% year-over-year in December.
In the food away from home category, menu prices at fullservice restaurants increased 0.8% in December, with prices averaging 0.4% growth each month in 2025, a solid pace. Meanwhile, limited-service menu prices rose 0.6% in December, with a monthly rate of 0.3% for the year.
On a year-over-year basis, full-service menu prices increased 4.9% in December, while limited-service prices rose 3.3% year-over-year. Despite sizable growth in 2025, 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 for food from vending machines rose 0.5% in December, continuing to increase at a healthy pace. Vending machine prices grew 0.7% each month on average in 2025. At the same time, menu prices at employee sites and schools increased 0.3% in December, with 0.4% growth each month on average last year. Prices at other food away from home locations increased 0.2% in December but averaged 0.5% monthly growth in 2025.
Year-over-year, prices at vending and mobile vendors rose 6.0% since December 2024, with prices for food at employee sites and schools increasing by 3.8%. The broader “other food away from home” category posted a 5.0% annual increase in prices in December year-over-year.
Regionally, menu prices grew strongly in every region of the U.S., but the fastest pace of growth in December was in the Northeast (+1.2%). Menu prices were also higher in the West (+0.7%), South (+0.6%), and Midwest (+0.5%). Over the past 12 months, the West (4.3%) and Northeast (+4.2%) experienced the fastest menu price growth, with the Midwest (+4.0%) and South (+3.9%) not far behind.
