Some Pressure Comes Off Wholesale Food Prices

Wholesales food prices fell in December for the second time in three months, according to data released last week by the Bureau of Labor Statistics. Prices at all three production stages tracked by the BLS posted declines. The National Restaurant Association’s average of wholesale food prices was 0.5% lower for the month.

Still, average prices rose a whopping 8% for the year, NRA reported, the largest annual gain since 1980. The increases were driven by double-digit jumps for nearly all the proteins, including beef, pork, eggs and dairy products. Among the major proteins, only poultry prices were lower for the year. Flour prices also were up sharply, with a 22% gain.

The softening of wholesales food prices in the last quarter of 2011 has at least one prominent research group suggesting food-price increases may not be as strong this year as many operators expect. Morgan Stanley, in its monthly research report for restaurant clients, released Jan. 3, said the recent food-price softening “could offer some upside to fiscal-year ’12 expectations, as most companies forecast another year of mid-single-digit inflation.”

On the consumer-price side, food-away-from-home prices rose 0.2% in December, compared to a 0.3% increase for food-at-home prices. For the past 12 months, grocery prices have risen 6% while menu prices are up only 2.9%. The differential has many observers expecting restaurant chains to be more aggressive with price increases this year.

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