Inflation growth slows slightly, but restaurant menu prices climb
The consumer price index rose 8.3% for the year ending April, down slightly from the 40-year high the previous month, although restaurant menu prices continued to climb , the US Bureau of Labor Statistics, or BLS, reported Wednesday.
The overall food index rose 0.9% in April, down slightly from 1.0% in March, ending the 12-month period up 9.4%. April marked the 17and consecutive monthly increase in food prices, the BLS said.
Food inflation, however, continued to drive the increase in the food category. Consumer prices for food at home increased by 10.8% for the year ending in April, while prices for food away from home increased by 7.2%.
Within the grocery category, dairy and related products rose 2.5% in April, the largest monthly increase since July 2007, the BLS said. Prices for non-alcoholic beverages also rose 2.0% in April, and the index for meat, poultry, fish and eggs rose 1.4%, with eggs up 10.3% for the month. However, fruit and vegetable prices fell 0.3% in April.
But out-of-home food prices rose 0.6% in April, compared with the 0.3% rise in March. Full-service restaurants recorded the largest monthly increase, up 0.9%, compared to a 0.3% increase for the limited-service segment.
Over the past year, prices at full-service restaurants have risen 8.7%, the largest 12-month increase since the BLS began recording inflation rates for the category in 1997. Limited-service menu prices increased 7.0% for the year ending April. .
Addressing their own higher input costs, restaurant chains indicated in the recent round of earnings that menu prices were likely to hold, although many said they expected inflation in commodities stabilizes at mid-teen highs during the year.
First Watch, Chipotle Mexican Grill, Texas Roadhouse Inc., Domino’s, El Pollo Loco, Sweetgreen and others said menu prices rose in the first quarter of this year to help offset rising food costs and of the work force. Wingstop was one of the few to benefit from the bone-in wing price deflation.
Most of those chains said they saw no consumer reaction to the price increases, but The Wendy’s Co. said on Wednesday that inflation was starting to impact consumer behavior, with traffic slowing among low-income diners.
On the other hand, Dine Brands Global Inc. said last week that value-positioned Applebee’s and IHOP had not seen traffic impacted by rising US inflation and gas prices. United, in part because wages had risen among low-income people, making consumers more confident about dining out.
John Peyton, CEO of Dine Brands, said it’s partly a “psychological mindset” as consumers give in to the pent-up need to dine out again, especially when grocery prices rise.
“People want to get back to their lives and hug each other again, and that offsets the very real stress of inflation,” he said.
Contact Lisa Jennings at [email protected]
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