Foodservice Equipment Reports

After Strong Run-Ups, Wholesale Food Prices Declined Slightly In August

Foodservice operators, who have been dealing with strong increases in wholesale food prices, caught a bit of a break in August, according to Producer Price Index data from the Bureau of Labor Statistics. Average whole prices fell 0.1% in August, only the second month this year that prices have fallen. Even beef and pork prices, which have soared this year, fell during the month. Still, average wholesale food prices are running 6.1% higher for the 12 months ended in August.

The increases in beef and pork prices are much more extreme. In spite of a 0.3% drop in August, beef and veal prices are up 28.6% during the past 12 months. Ranchers culled herds following the drought of 2012 and demand finally caught up with the reduced supply this year. Pork prices are up 25.8% in the past 12 months, as a virus has decimated piglet populations. Dairy prices are also running 12.5% higher for the last 12 months led by a staggering 71.1% increase in butter prices. Only poultry, egg and vegetable prices have remained reasonable.

The wholesale price increases have helped drive grocery store and foodservice menu prices higher. Both menu and grocery-store prices rose another 0.2% in August, according to Consumer Price Index data from the BLS. For the past 12 months, grocery-store prices are 2.9% higher while menu prices have risen 2.5%. The gap between the 6.1% increase in wholesale food prices and the more moderate 2.5% gain in menu prices mean operators are seeing their profit margins squeezed.

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