Menu Prices

The Consumer Price Index (CPI) rose 0.2% in February, easing from January’s sharp 0.5% increase—the fastest monthly gain since August 2023. This was better than the expected 0.3% rise in consumer inflation. On a yearly basis, consumer prices have climbed 2.8% over the past 12 months, down from 3.0% in January.  

Food prices edged up 0.2% in February, slowing from 0.4% in January. Grocery store prices inched up 0.1% using seasonally adjusted data, while menu prices rose 0.4%, the steepest gain in eight months (see below). Energy costs increased 0.2% for the fourth consecutive month, though gasoline prices fell 1.0%.  

Excluding the more volatile food and energy categories, core consumer prices rose 0.2% in February, down from 0.4% in January. Notable contributors to the increase in core inflation included used cars and trucks (+0.9%), apparel (+0.6%), medical care services (+0.3%), shelter (+0.3%), and household furnishings and supplies (+0.2%), with declining prices for transportation services (-0.8%) and new vehicles (-0.1%).

Core inflation has risen 3.1% over the past year, down from 3.3% in January—the slowest annual increase since April 2021. While prices remain elevated, progress on core inflation has been notable over the past three years.

The Federal Reserve remains cautious, awaiting further economic data before making monetary policy decisions. Given current conditions, the Federal Open Market Committee (FOMC) is unlikely to lower short-term interest rates at its March 18–19 meeting.

Menu prices have risen 3.7% since February 2024

Menu prices rose 0.4% in February, marking the sharpest increase since June. The Consumer Price Index (CPI) for dining out—or Food Away from Home—has climbed 3.7% over the past year, up from 3.4% year-over-year in January, which had been the slowest annual rise since July 2020. Despite this uptick, menu inflation has eased significantly from 4.5% in February 2023 and even more so from its March 2023 peak of 8.8%.

Meanwhile, grocery prices edged up just 0.1% in February (seasonally adjusted), a sharp slowdown from January’s 0.8% jump. (On a non-seasonally adjusted basis, grocery store prices were flat for the month.) Over the past year, the CPI for Food at Home increased 1.9%, matching January’s pace and remaining the fastest annual gain since October 2023. However, much like restaurant prices, grocery inflation has cooled dramatically from its August 2022 peak of 13.5% year-over-year.

In the food-away-from-home sector, full-service restaurant prices rose 0.4% in February, up from 0.1% in January, marking the sharpest monthly increase since September. Meanwhile, limited-service menu prices increased 0.3% for the second consecutive month.

On a year-over-year basis, full-service menu prices have risen 3.7% since February 2024, while limited-service menu prices have climbed 3.5% over the past 12 months. For context, at their peaks, full-service menu prices surged 9.0% year-over-year multiple times in 2022, while limited-service prices hit a high of 8.2% in April 2023.

In the broader food-away-from-home sector, menu prices at employee sites and schools rose 0.5% in February, the strongest monthly gain since October, while food from vending machines and mobile vendors increased 0.3% for the month.

Over the past year, prices for food at employee sites and schools have climbed 4.0%, while food from vending machines and mobile vendors has risen 3.9%. In contrast, other food purchased away from home jumped 5.1% year-over-year in February, marking the fastest annual increase since May.

Regionally, the West saw the highest menu price growth, with a 4.3% year-over-year increase. In contrast, the Midwest experienced the slowest growth at 3.2% year-over-year. The Northeast and South reported more moderate increases, with menu prices rising 3.6% and 3.4% year-over-year, respectively.