Grocery prices are coming down as restaurants open back up, new data from the Bureau of Labor Statistics show.
Price inflation for food consumed at home eased to 3.3% in March on a year-over-year basis, the Bureau’s Consumer Price Index showed. That figure was 3.7% in February. The index for food away from home in March—a proxy for restaurant inflation—was up by 3.7% year over year, marking the first month since pandemic restrictions took hold last March that restaurant food prices increased faster than grocery.
Two of the six major grocery store food group indexes increased: The index for fruits and vegetables rose 1% in March, following a 0.7% increase in February. The index for meats, poultry, fish and eggs rose 0.1% in March, a smaller increase than the 0.3% increase in February. The index for other food at home was unchanged over the month.
The index decreased for dairy and related products (down 0.5%), nonalcohol beverages and materials (down 0.2%) and cereals and bakery products (down 0.1% in March), CPI data showed.
Year-over-year data showed cereals and bakery products up by 2.6% (vs. 2.7% in February); meats, poultry, fish and eggs up by 5.4% (vs. 5.2% in February); dairy and related products up by 1.6% (vs. 2.7% in February); fruits and vegetables up by 3.8% (vs. 3.4% in February); nonalcohol beverages and materials increasing by 3.2% (vs. 4% in February); and other food at home products up by 2.2% (vs. 2.8% in February).
From a regional perspective, CPI food at home in the Northeast accelerated to 2.5% (vs. 2.4% in February); in the Midwest, accelerated at 2.7% (vs. 2.6% in February); in the South, decelerated to 3.7% (vs. 4.2% in February); and in the West, decelerated to 3.8% (vs. 4.3% in February).
MKM Partners analyst Bill Kirk in a note to clients this week showed that in Denver, where indoor dining resumed in February, food-at-home inflation dipped from 2.5% to 1.4% in March. In Philadelphia, where dining restrictions eased in January, grocery inflation fell from 2.5% in the fourth quarter to 0.1% deflation in March. And in San Francisco, where restaurants resumed partial in-store dining in early March, grocery inflation decelerated to 3.9% in March from 6.7% in February and more than 8% in December and January, MKM said.
“As restaurants reopen more broadly, we expect national food-at-home inflation to come down (i.e., pricing power disappears),” Kirk wrote. “Our concern emerges with the possibility that input costs are inflationary … without the channel pricing power to pass it through.”
The input inflation Kirk referred to was a 2.6% increase in the Producer Price Index, announced by the Bureau late last week.