The Consumer Price Index in October rose 0.2% and is now 2.6% higher year-over-year, largely in line with expectations. According to data released Wednesday morning from the Bureau of Labor Statistics, food costs were up 2.1%, showing signs of continued moderation. In September, food prices overall were up 2.3% year-over-year.
Food-away-from-home continues to trend significantly higher than grocery/supermarket prices, finishing October up 3.8% year-over-year, versus 1.1% for food-at-home prices. Still, restaurant prices are also showing signs of moderation, increasing 0.2% in October, down from 0.3% in both September and August and marking the lowest month-over-month increase since at least April.
The index for full-service meals rose 0.2% over the month as did the index for limited-service meals. The index for limited-service meals increased 3.8% over the last 12 months, while the index for full-service meals rose 3.7% over the same period. By comparison, limited-service meals were up by 4.1% year-over-year in September, versus full-service meals, which were up 3.9%.
That said, October marked the 20th month in a row in which restaurant pricing outpaced grocery/supermarket pricing, according to Kalinowski Equity Research. Founder/chief executive officer Mark Kalinowski noted that the gap increased by 10 basis points to 270 basis points in favor of grocery stores. The 22-year historical average is a 60-basis-point gap, he added.
“The U.S. restaurant industry as a whole remains well on a path to have full-year 2024 be the worst (non-pandemic) same-store sales year since 2016, and this much larger than historical average gap is one reason why,” Kalinowski wrote in a note Wednesday.
Tony Smith, CEO and co-founder of Restaurant365, adds that while inflation pressures are still present, they appear to be stabilizing at a more moderate pace.
"For businesses, this may signal a need to keep a close eye on cost structures, as rising prices continue to impact operating expenses and consumer purchasing power,” he said. “In sectors like dining, where pricing is sensitive, it’s essential to strike a balance between covering costs and remaining accessible to consumers. Careful management of resources and strategic adjustments will be crucial as companies navigate this gradual shift.”
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