Inflation growth slows slightly, but full-service menu prices climb to record high

The Consumer Price Index increased 8.3% for the year ending in April, a slight dip from the prior month’s 40-year-high, though restaurant menu prices continued to climb, the U.S. Bureau of Labor Statistics, or BLS, reported Wednesday.

The index for food overall increased 0.9% in April, down slightly from 1.0% in March, ending the 12-month period up 9.4%. April marked the 17^th consecutive monthly increase for food prices, the BLS said.

Grocery inflation continued to drive the food category increase, however. Consumer prices for food at home was up 10.8% for the year ending in April, while prices for food away from home grew 7.2%.

Within the grocery category, dairy and related products rose 2.5% in April, the largest monthly increase since July 2007, the BLS said. Nonalcoholic beverage prices also increased 2.0% in April, and the index for meats, poultry, fish and eggs rose 1.4%, with eggs up 10.3% for the month. However, prices for fruits and vegetables fell 0.3% in April.

But prices for food away from home increased 0.6% in April, compared with the 0.3% rise in March. Full-service restaurants had the largest monthly increase, up 0.9%, compared with a hike of 0.3% for the limited-service segment.

Over the past year, prices at full-service restaurants have increased 8.7%, the largest 12-month increase since the BLS began recording inflation rates for the category in 1997. Limited-service menu prices were up 7.0% for the year ending in April.

Addressing their own higher input costs, restaurant chains during the recent round of earnings indicated menu prices would likely continue, though several said they expected commodity inflation to level off at mid-teen highs over the course of the year.

First Watch, Chipotle Mexican Grill, Texas Roadhouse Inc., Domino’s, El Pollo Loco, Sweetgreen and others said menu prices increased in the first quarter this year to help offset higher food and labor costs. Wingstop was one of the few to benefit from deflation in bone-in wing prices.

Most of those chains said they were not seeing pushback from consumers on price increases, but The Wendy’s Co. on Wednesday said inflation is beginning to impact consumer behavior, with traffic slowing among lower-income diners.

On the other hand, Dine Brands Global Inc. last week said the value-positioned Applebee’s and IHOP have not seen traffic impacted by the higher inflation and gas prices across the U.S., in part because wages have increased among lower-income earners, giving some consumers more confidence about dining out.

John Peyton, Dine Brands CEO, said it’s partly a “psychological mindset” as consumers give in to pent-up need to dine out again, particularly as grocery prices climb. 

“People want to get back to their lives and hug each other again, and that’s offsetting the very real stress about inflation,” he said.

Contact Lisa Jennings at [email protected]

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