March consumer prices rise as restaurant-grocery gap shrinks

Menu price inflation slowed a fraction in March, according to the latest Bureau of Labor Statistics Consumer Price Index released Wednesday.

The Consumer Price Index rose 0.4% in March, the same increase as in February, the U.S. Bureau of Labor Statistics reported.

Over the last 12 months, the agency said, the all-items index increased 3.5% before seasonal adjustment, which was higher than many economists had expected. More than half the monthly increase was from gasoline and shelter, the agency said.

Food-at-home prices, from groceries and supermarkets, were up 1.2% in March, compared with food-away-from-home, or restaurant, prices that increased 4.2%. But restaurant prices slowed by 30 basis points from the 4.5% increase in February, the agency said.

Mark Kalinowski of Kalinowski Equity Research noted Wednesday that the latest report “shows that prices for food-at-home (grocery stores and supermarkets) rose by 1.2% in March — sequentially up by 20 basis points from February’s 1%. This marks the first sequential rise in grocery pricing since August 2022.”

“This marks the 13th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing,” he said.

Kalinowski said the gap between grocery/supermarket inflation and restaurant inflation sequentially shrunk, to -300 basis points in favor of groceries. “This is the lowest that gap has been since June 2023, when it was also -300 basis points in favor of grocery store,” he said. “For the remainder of 2024, we generally expect the current gap in favor of grocery stores to gradually shrink.”

March was the 12^th consecutive month in which the gap favored groceries, he noted, and was “simultaneously larger than the 22-year historical average gap.”

The March 4.2% figure is actually the lowest of any month since late 2021,” he added. “This at least partially reflects the good news that most commodity-cost pressures are meaningfully easing, compared to what was going on 12 to 18 months ago.”

The Bureau of Labor Statistics noted the “index for limited-service meals rose 5% over the last 12 months, and the index for full-service meals rose 3.2% over the same period.”

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