The price gap between groceries and restaurants continued to narrow in December, according to the latest Consumer Price Index released Wednesday.
CPI data for December indicated that prices for food-at-home (groceries and supermarkets) rose by 1.8%, up 20 basis points from November’s increase of 1.6%.
That 1.8% increase compared with prices for food-away-from-home (restaurants) that increased by 3.6% year-over-year in December, equal to November’s 3.6%.
“This marks the 21st month in a row for which restaurant pricing is outpacing grocery/supermarket pricing,” analyst Mark Kalinowski noted in a report Wednesday morning. “However, the gap between grocery pricing and restaurant pricing in December 2024 was the smallest since April 2023’s 150-basis-point gap.”
Overall, the CPI increased a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%, the Bureau of Labor Statistics reported. Core CPI, or prices excluding the volatile energy and food costs, rose 3.2% on an annual basis.
“The U.S. restaurant industry generated its worst non-pandemic same-store sales during 2024 since 2016, and the larger-than-average historical gap between grocery pricing and restaurant pricing is one reason why,” noted Kalinowski, principal at Kalinowski Equity Research. “Will this gap hamper H1 2025 restaurant industry same-store sales as well? Maybe so, although the gap shrinking by quite a bit over November/December may provide some reason that the gap won’t be so bad from the restaurant industry’s perspective as 2025 unfolds.”
The Bureau of Labor Statistics notes today that “The index for limited service meals rose 3.7% over the last 12 months and the index for full-service meals rose 3.6% over the same period.”
Joe Hannon, general manager for inventory and purchasing at Restaurant365, the consultancy, said: “This morning’s CPI report brought some tough, though expected news — inflation ticked up, adding pressure on both businesses and families during and following the holiday season.
“Rising costs could make it harder for businesses to manage expenses, while households might feel the squeeze on their budgets,” Hannon said via email. “For the restaurant industry, it’s a moment to take a hard look at pricing and keep a close eye on how customers are adjusting their spending. While the increase is a challenge, staying adaptable will be key as the year unfolds, with economic shifts and policy updates still shaping what’s ahead.”
Contact Ron Ruggless at [email protected]
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