The Consumer Price Index for September, announced Friday, shows that inflation rose 0.3% month-over-month and 3% year-over-year.
The CPI reading is at its highest level since January but fell below expectations, which could support another interest rate cut next week. Economists’ expectations for September were respective readings of 0.4% and 3.1%.
According to federal data — delayed by 10 days due to the government shutdown — the overall food index rose 0.2% over the month, with menu price increases cooling to 0.1% versus grocery prices, which increased 0.3%. Grocery prices jumped 2.7% year-over-year, marking the category’s highest inflationary level since August 2023.
Menu prices are now 3.7% higher than September 2024. Full-service meals rose 4.2%, while limited-service meals rose 3.2% over the same period.
Year-to-date, limited-service menu prices have averaged monthly growth of 0.2%, according to the National Restaurant Association. In contrast, full-service prices were unchanged in September, breaking a streak of seven consecutive monthly increases that averaged 0.4%.
Notably, the gap between menu and grocery prices shrunk in September to its smallest level since March 2023, according to Kalinowski Equity Research. Despite the recent moderation, menu inflation remains firm, which has dampened visits and frequency across segments and is reshaping dining habits. A new report from YouGov finds that 37% of Americans are dining out less frequently than they were a year ago, while 69% of those cutting back cite rising costs. Just 8% of Americans say they are dining out more.
Eighty-two percent of all Americans say menu prices have increased in the past 12 months, yet just 28% believe those higher prices are fair for the quality received.
Further, 54% of Americans have reported changing their dining habits to spend less, including choosing cheaper restaurants (60%), using discounts or coupons (53%), ordering fewer items (51%), and skipping drinks (42%).
This data comes on the heels of a Circana report showing that restaurant deal-seeking is at its highest level in 50 years, with nearly 30% of all visits tied to a deal.
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