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Restaurant menu price inflation slowed in September


Restaurant menu price inflation rose at a slower pace in September, but headline inflation was worse than expected. / Photography: Shutterstock.

The prices consumers paid for food away from home rose 8.5% year-over-year in September, according to new federal data released Thursday, as the end of many school lunch programs free has masked a moderation in the rate at which restaurants are increasing menu prices.

Still, headline inflation rose 8.2% last month, driven by higher prices consumers pay for food at the grocery store and for housing. This rate was faster than expected and will likely continue to raise U.S. Federal Reserve interest rates and lower stock prices on Thursday.

Take-home food prices have risen 13% over the past year, driven by rising costs of everything from breakfast cereals (+24%) to butter (+32%).

But the CPI for all items outside food and energy has risen 6.6% over the past year, the highest rate since 1982.

Restaurants, however, appeared to slow the rate of menu price increases last month amid growing concern over the consumer’s willingness to continue dining with prices rising at historically high rates, even as other prices rise faster.

Full-service prices rose 0.4% last month, half the rate in August. For the year, meals at full-service restaurants rose 8.8%, a slowdown from 9% in August.

In restaurants with limited service, prices moderated more slowly, rising 0.6%, compared to 0.7% in August. For the year, prices rose 7.1% at chains like McDonald’s and Panera Bread.

Rising out-of-home food prices have been the end of many free school lunch programs that have sent prices skyrocketing at schools and employee sites. These prices are up 45% in September and 91% over the past year.

Although restaurants are slowing their rate of increase, they are still increasing their prices at remarkably high rates. There are growing indications that consumers are shifting their spending to accommodate these higher prices, eating out less, getting more value items, or dining at chains like McDonald’s.

(Learn more about consumer price breakpoint.)

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