Restaurant menu price inflation continues to increase at a rate well over that of grocery stores but even more when compared with the amount of money Americans are actually earning.
Food-away-from-home prices rose 3.5% year over year in September, according to federal data released on Wednesday. Limited-service restaurant prices rose 3.2%, while full-service prices rose 3.8%.
That was slightly slower than the consumer price index, which spiked 0.6% month over month and was up 3.7% over the past year. But it was much faster than food-at-home prices, which were flat in the month and up 2.5% over the past year.
And prices are also rising faster than customers’ ability to pay them. Hourly wages are up just 3% over the past 12 months, according to the U.S. Bureau of Labor Statistics. The combination of wages and prices effectively means that consumers’ spending power has fallen by 0.7% over the past year.
The inflation data sent stocks down more than 1% on Wednesday and could mean more interest rate increases are in the future, as the U.S. Federal Reserve looks to slow down the rate of inflation.
The gap in prices compared with wages helps explain weak consumer sentiment, which declined 13.6% year over year in October, according to the Survey of Consumers at the University of Michigan.
It is also putting more pressure on restaurant chains that are contending with ongoing declines in customer traffic.
Quick-service restaurant sales were up just 0.6% in the third quarter, according to the data firm Revenue Management Solutions. Traffic during the period declined 2.6%.
