Restaurant menu prices hit a new 40-year high in June./Photo: Shutterstock
Restaurant menu prices hit a new 40-year high in June, according to new federal data released Wednesday, as soaring inflation has driven a steady rise in the amount operators charge customers.
Out-of-home food prices rose 0.9% in June, new data from the U.S. Bureau of Labor Statistics shows, and 7.7% over the past year, the highest rate since 1981 .
That was lower than headline inflation, which itself hit a 40-year high of 9.1% in June, higher than economists expected. The rate is likely to force the US Federal Reserve to continue its aggressive interest rate hikes until inflation is brought under control. In general, the Fed aims for annual inflation of 2%.
For restaurateurs, increases in wage rates – up about 13% from last year – as well as food costs, driven by a host of factors, have eroded profit margins, necessitating increase menu prices.
Prices for full-service menus have increased by 8.9% over the past year. Prices for limited services have increased by 7.4% over the past 12 months.
Substantial as these price increases are, they pale in comparison to the increase in prices consumers are paying at the grocery store. Take-home food prices have risen 12.2% over the past 12 months, the largest 12-month increase since April 1979. The higher inflation rate at retail food stores likely provides a net security for restaurant sales, giving consumers more than one reason to dine out despite higher menu prices.
But rising prices could also cause consumers to limit their overall spending and there is plenty of evidence to suggest that consumers are distressed by soaring inflation. The consumer confidence index as measured by the University of Michigan hit a historic low in June.
Consumers are being hit with higher prices on a host of items, including gasoline – up 61% over the past year – as well as heating oil (up 98.5%) and oil. electricity (up 19%). The price of new vehicles increased by 11.4%.
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