Wholesale And Consumer Food Prices Surge Again

One of the key factors in foodservice operators’ increasing gloominess about the future is that wholesale food prices keep rising, boosting costs at a time of sinking same-store sales and traffic. In July’s National Restaurant Association Restaurant Performance Index, operator expectation about business conditions in the next six months fell two full points.

Operators got no relief in August. Overall wholesale food prices rose 1.5%, according to the NRA, the 12^th time in the last 14 months prices moved higher. Wholesale food prices now stand 10.5% above a year ago, the strongest 12-month gain since 2003. On the so-called “finished” foods index, a component of the Bureau of Labor Statistic’s Producer Price Index, prices rose 1.1% in August following 0.6% gains in June and July.

Nearly all the key foodstuffs saw gains during the month. Pork prices jumped 5.6% while beef and veal rose 1.3%.  Egg prices soared 19.9%; milk, butter and cheese prices were all higher. All the proteins, except for poultry, and most of the cereals, sugar, coffee and fats and oils, have experienced double-digit price gains in the past year. Processed poultry prices rose 2.8% in August, but are 0.8% lower than a year ago, which explains why so many chains are currently featuring chicken products.

The price increases at the wholesale level are driving menu prices higher too. Menu prices stand 2.7% higher than a year ago. They rose 0.4% in August, according to the BLS, the biggest monthly gain since October ’08, said the NRA. But the differential between menu and grocery store food prices widened in August, as food-at-home prices jumped 0.6% for the second consecutive month. Food-at-home prices are 6% higher than a year ago.