Menu Prices

The Consumer Price Index (CPI) slipped 0.1% in March, following a 0.2% increase in February and defying expectations for a modest 0.1% rise. This marks the first monthly decline in consumer prices since May 2020. On an annual basis, inflation slowed to 2.4%, down from 2.8% in the prior reading—its lowest pace since February 2021.

Despite the overall decline, food prices continued to climb, rising 0.4% in March after a 0.2% gain in February. Menu prices advanced 0.4% for the second consecutive month, while grocery prices jumped 0.5%, marking their second strong increase in three months. Energy prices, however, fell 2.4%, led by a sharp 6.3% drop in gasoline.

Core CPI—which excludes volatile food and energy components—rose 0.1% in March, a slowdown from February's 0.2% and the smallest monthly increase in nine months. Core inflation over the past year eased to 2.8%, down from 3.1% in February, and now sits at a four-year low.

Price movements within core categories were mixed. Medical care services (+0.5%), apparel (+0.4%), shelter (+0.2%), and new vehicles (+0.1%) posted gains, while transportation services (-1.4%), medical care commodities (-1.1%), and used cars and trucks (-0.7%) saw declines. Household furnishings and supplies were flat.

The Federal Reserve is taking a cautious stance, waiting for more data before adjusting monetary policy. While rate cuts remain on the table for later this year, the FOMC is unlikely to act in the near term. Tariffs provide a wild card for inflation moving forward, potentially rising prices in April and the coming months.

Menu and grocery store prices rose strongly in March

Menu prices rose 0.4% in March, matching February’s increase and marking the second consecutive monthly gain. Over the past year, the Consumer Price Index (CPI) for dining out—categorized as Food Away from Home—has climbed 3.8%, slightly up from 3.7% in February. While this represents a modest uptick, menu inflation has cooled significantly from its peak of 8.8% year-over-year in March 2023, the highest rate in over two decades.

Grocery prices also edged higher, rising 0.5% in March after seasonally adjusted gains of 0.8% in January and 0.1% in February. (Unadjusted data shows a 0.5% increase in January and flat prices in February.) On an annual basis, the CPI for Food at Home rose 2.4%—the fastest pace since September 2023. Still, grocery inflation has eased sharply from its August 2022 high of 13.5% year-over-year.

In the food-away-from-home category, full-service restaurant prices jumped 0.6% in March, accelerating from a 0.4% gain in February and marking the strongest monthly increase in nine months. In contrast, prices at limited-service establishments rose a more modest 0.2%, down from 0.3% in each of the previous two months and the slowest pace since October.

Year-over-year, full-service menu prices have climbed 4.1%—the highest annual increase in 14 months. Limited-service prices, meanwhile, are up 3.4% over the past 12 months. While both figures reflect ongoing inflation, they remain well below recent peaks: full-service prices surged as high as 9.0% year-over-year on several occasions in 2022, while limited-service prices hit a high of 8.2% in April 2023.

Within the broader food-away-from-home category, prices for food from vending machines and mobile vendors surged 2.0% in March—the second sharp increase in the past three months. In contrast, prices at employee sites and schools rose just 0.1%, indicating relative stability in institutional food costs.

Over the past year, vending and mobile vendor prices have climbed 6.7%, marking the fastest annual increase in 11 months. Prices for food at employee sites and schools are up 3.8% year-over-year, while the broader “other food away from home” category saw a 4.7% annual increase in March.

Regionally, the West recorded the fastest menu price growth, with a 4.3% year-over-year increase in March. At the other end of the spectrum, the South saw the slowest pace, with menu prices rising 3.5% over the same period. The Northeast and Midwest posted more moderate gains of 3.8% and 3.6%, respectively.