WASHINGTON The latest Consumer Price Index from the federal government showed that price inflation rose faster for food away from home as compared with food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
New data from the U.S. Department of Labor, released last week, showed that the general Consumer Price Index, or CPI, remained unchanged in April when compared with March, and fell 0.7 percent when compared to April a year ago. The CPI is a measure of the average change in prices of goods and services purchased by U.S. households.
For food at home, which can generally equate to grocery store prices, the year-over-year change in prices increased 2.3 percent in April. For food away from home, which generally equates to restaurants, the changes in prices rose 4.6 percent in April, versus a year ago.
“The retreat in grocery store price inflation relative to restaurants could represent another headwind for restaurant operators in the current challenging economic environment,” restaurant analyst Jeff Omohundro at Wachovia Capital Markets said in a report. “In our view, the recent reversal in grocery store versus restaurant inflation could enhance consumers’ affordability perception of eating at home versus dining out.”
Omohundro said the April CPI report was the first time since February 2007 that prices for food-at-home inflation fell “meaningfully below” food-away-from-home inflation. Until April, price inflation for food at home and food away from home had been similar. The growth in the CPI for food at home was 5.7 percent in January, 4.8 percent in February and 4.2 percent in March. The CPI for food away from home was 4.9 percent, 4.8 percent, and 4.6 percent, respectively, Omohundro noted.
Many restaurants have been forced to raise menu prices to combat slowed guest traffic and rising operating costs. Chipotle, for example, took price increases of late that have totaled more than 6 percent. Einstein Noah, the parent to bagel brands including Einstein Bros. Bagels and Noah’s New York Bagels, also took price increases between 1.5 percent and 2 percent in its latest quarter. Panera Bread and Starbucks are other chains that have explored or undertaken selective price increases.
According to Omohundro, the last time the CPI for food at home declined on a sequential basis to near current levels was in May 2002, which was followed by a months-long decline in Wachovia’s restaurant stock index.
Contact Sarah E. Lockyer at [email protected].