Inflation gap between grocery, restaurants narrowsInflation gap between grocery, restaurants narrows

Restaurant menu prices rose 0.3% last month, maintaining a steady pace it has established over the past year, according to new federal data released on Wednesday. 

Over the past year, prices for food away from home increased 3.6%, according to the U.S. Bureau of Labor Statistics. 

Prices for food at home, including places such as grocery stores, also increased 0.3% in December. They increased 1.8% on a year-over-year basis. 

The gap in inflation between the two big purveyors of food to consumers was 180 basis points, the lowest rate since April 2023. 

That gap had created growing consternation within the restaurant industry as diners noticed continued price increases and expressed frustration on social media platforms while they cut back on dining out. 

A gap of more than 300 basis points, as it was much of 2023 and 2024, generally leads to a shift in spending from one sector to the other. 

Restaurant traffic broadly fell last year as diners slowed the pace of spending, particularly at fast-food chains such as McDonald’s. 

Restaurants raised their prices aggressively coming out of the pandemic largely out of necessity, as their own prices for labor and food increased at rates unseen in 40 years. Those inflationary cost increases have slowed this year, however, as the labor shortage eased and food costs moderated. 

Limited-service restaurants increased prices 0.4% last month and are up 3.7% over the past year. They rose 0.3% at full-service restaurants and 3.6% for the full year. 

Overall, the consumer price index is up 2.9% over the past year, continuing a general trend of moderating inflation. 

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This story was originally featured on Restaurant Business, a sister publication of Supermarket News.