Happy Thanksgiving! Wholesale Food Prices Fall Again As Menu Prices Continue To Rise

Food prices at the wholesale level fell 1.4% in October, as beef and egg prices recorded decreases, and prices of most other food commodities were flat, according to Producer Price Index data from the U.S. Bureau of Labor Statistics. The decline follows a 1.6% drop in September and was the ninth month in the last 12 that wholesale food prices have fallen. During the past 12 months, overall wholesale food prices are down 4.9%.

Egg producers finally are rebuilding flocks following the avian flu outbreak that decimated flocks this spring. Egg prices in October fell 27.4% following a 24.1% decline in September. Still, egg prices remain 24.2% higher than a year ago. Beef and veal prices were down 6.2% in October and now are running more than 10% below this time a year ago.

While wholesale food prices are falling, menu prices continued to rise in October. Menu prices rose 0.2% in the month following a dramatic 0.5% gain in September. Price increases at restaurants are running 2.9% higher than a year ago and remain on track for their largest gain since 2009. At the same time, food-at-home prices, more closely tied to whole-food prices, rose only 0.1% in October and are up a mere 0.7% for the past 12 months.

The combination of falling wholesale food prices and increasing menu prices have helped boost operator profit margins and cash flow throughout 2015.

Both the U.S. Department of Agriculture and the Food and Agriculture Organization of the United Nations expect very moderate gains in food prices in the U.S. and throughout the world in 2016. Both predict increases in the 2%-3% range.

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