Gap Between Menu And Grocery Store Prices Continued To Grow Last Month

You gotta give it to restaurant operators: They are consistent. For the seventh month in a row, restaurant menu prices, as tracked by the Bureau of Labor Statistics for the monthly Consumer Price Index, rose 0.2% in September. Meanwhile, prices at grocery stores and other retail outlets continued to fall last month, down 0.1%. It was the fifth consecutive decline and the ninth in the last 10 months.

During the past 12 months, menu prices have risen 2.4% while grocery store prices are off 2.2% from a year ago, the largest decline since the depth of the recession in 2009. And according to the National Restaurant Association, this has led to the largest gap, 4.6 percentage points, between menu price and grocery price changes in nearly seven years. Many observers believe the gap is hurting restaurant sales and traffic, particularly among lower-income households.

Meanwhile, overall wholesale food prices rose for the first time in three months in September, up 0.6%, following declines of 0.6% and 1.2% in July and August. But even with the September increase, average wholesale food prices are running 4.8% below their level a year ago. The drop in wholesale prices is driving the declines in grocery store prices and helping operators with margins even as they deal with rising labor and other costs.