Higher food prices could hurt grocers and help restaurants
Drought, sick pigs and high demand are just a few of the reasons that food prices have been climbing in recent months and hitting consumers squarely in the wallet. According to the U.S. Department of Agriculture (USDA), the Consumer Price Index (CPI) for all food increased 0.4 percent from March to April and then 0.4 percent from April to May to stand at 2.5 percent above where it was in May of last year.
While food prices are going up across the board, the rate of increase is not uniform, according to USDA figures. Prices at grocery stores now stand at 2.7 percent above the May 2013 level while those charged by restaurants have risen 2.2 percent on a year-over-year comparison.
The shrinking of the gap between the prices charged in grocery stores and restaurants could prove a boost to foodservice operators, according to Bernstein analysts Alexia Howard and Sara Senatore.
According to a forecast by the analysts, via NBC News, prices for food-at-home will rise 3.5 percent in the second half of the year while restaurant prices will increase only 2.5 percent.
While one percent doesn’t sound like much on the surface, the analysts pointed to other factors that go into the decision of whether to make a meal at home or go out, including prep and clean up time.
- Food Price Outlook – United States Department of Agriculture
- Hefty Price Hikes for Fresh Food Amid Drought, Disease – National Geographic
- Why Grocery Shopper Pain May Be Restaurants’ Gain – NBC News
- Cost of eating at home in April rose most in nearly two years – Bloomberg News/NorthJersey.com
How do you expect higher food inflation, should it persist, to affect the dining habits of Americans? How would you address the issue if you operated a grocery store? What if you operated a restaurant?