Grocery prices and the cost of eating out at restaurants both rose in January, according to the latest Consumer Price Index (CPI) data. Yahoo Finance Retail reporter Brooke DiPalma unpacks the inflationary pressures weighing on food prices and restaurant chains.
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Editor's note: This article was written by luke carberry morgan.
video transcript
– Inflation figures released this morning suggest the gap between the cost of eating out and the cost of food consumed at home is widening. He spoke with Brooke DiPalma of Yahoo Finance to find out what's driving these inflationary pressures. Brook.
Brooke DiPalma: Hi Josh. So we're pretty sure that he's been monitoring food prices for three years now. It certainly feels like a burden to Americans. But certainly when it comes to the food sector in the CPI report being released today, the cost of eating out has actually outpaced the rise in inflation.
And primarily, what we're seeing here is that labor inflation is running ahead of commodity inflation. And that's what keeps eating out inflation rising. And the real pressure here right now is the limited pricing of service menus within this eating out category.
This segment of the CPI report alone rose 5.8%, again largely due to labor inflation. And last month, at the beginning of this year, 22 states raised their minimum wages. Florida, Nevada and Oregon also plan to raise their minimum wages later this year.
And we're also looking at the FAST Act. This is scheduled to go into effect in California on April 1st. This would raise the minimum wage there to $20 an hour. When you think about this food price increase, this labor inflation is really weighing on you. That may be why Americans think so much about eating out.
