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National Restaurant Association - Economist's Notebook: Menu price growth outpaced inflation in recent months

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Economist's Notebook: Menu price growth outpaced inflation in recent months

In his latest commentary, the National Restaurant Association's chief economist Bruce Grindy looks at the latest trends in wholesale food costs and menu prices.  Average wholesale food prices registered consecutive monthly declines for the first time in nearly three years, though they still remained elevated overall.  Meanwhile, menu price growth accelerated somewhat, outpacing overall consumer prices for the fourth consecutive month. 

Although wholesale food prices remain elevated overall, they eased off slightly from the strong levels reached during 2011.  For the first time in nearly three years, average wholesale food prices posted two consecutive monthly declines.  According to the Bureau of Labor Statistics, average wholesale food prices fell 0.7 percent in January, which followed a 0.5 percent drop in December. 

Despite the recent declines, wholesale food prices remained 5.8 above their January 2011 levels.  While still a significant increase, the 12-month growth was down from the strong double-digit gains registered in mid-2011.

Meanwhile, menu price growth picked up somewhat in recent months, with monthly gains outpacing overall consumer prices for the fourth consecutive month in January.  As a result of the recent stronger gains, menu prices were up 3.1 percent in the 12 months ending January 2012, the first time in two-and-a-half years that menu prices posted 12-month growth in excess of three percent.

Despite the recent acceleration, menu price growth remained well below that of grocery store prices, which jumped 5.3 percent in the 12 months ending January 2012.  In comparison, overall consumer prices were up 2.9 percent during the same 12-month period.

Trends in Consumer Prices
Percent change versus same month in previous year

Tnreds in Consumer Prices.gif

Source: Bureau of Labor Statistics

For additional analysis of restaurant industry trends, log on to Restaurant TrendMapper (subscription required).


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