Menu price inflation accelerated in August

Inflation may have peaked, but menu prices continue to climb.

Prices at restaurants and other foodservice operations increased 0.9% in August, the U.S. Bureau of Labor Statistics said on Tuesday. Prices are up 8% over the past year as operators increased charges to consumers to offset their own cost increases for wages and food.

Much of that acceleration is due to sharply higher prices at school lunch programs, where many states ended free meals to students. Prices at schools and employee sites are up 23.7% over the past year.

But both full-service and limited-service restaurants continue to raise prices. Full-service spots increased prices 0.8% last month, higher than the 0.6% increase the month before. Limited-service restaurants increased prices 0.7%, down from the 0.8% they increased prices in July.

For the full year, full-service concepts have increased menu prices 9%. Limited-service restaurants increased charges 7.2%.

The higher foodservice prices come as overall food prices for consumers show little sign of slowing down.

Food prices are up 11.4% over the past 12 months, including 0.8% in August. That was the highest rate since 1979.

Driving much of that is higher prices at grocery stores, which rose 0.7% in August and 13.5% over the past year. Consumers paid much higher prices for everything from breakfast cereal (23%) to eggs (40%).

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The wide gap in price increases between grocers and restaurants, 5.5%, is historically high and has helped restaurants maintain demand despite raising their own prices higher than normal. Yet concern about inflation has led many restaurants to start shifting to value. Domino’s this month started giving customers 20% off all menu items ordered on digital channels, for instance.

Overall, inflation rose 0.1% in August. But on an annual basis, the consumer price index slowed to 8.3% from 8.5% the previous month. Lower gas prices drove much of that slowdown.