Food Prices: As Dining Out Costs Climb in 2024, It May Pay to Eat In

Updated Feb. 13, 2024, to reflect the most recent consumer price index data.

Food prices have always been volatile — especially so during the pandemic. Thanks to a combination of inflation, supply-chain disruptions and tariffs on certain foreign imports, food prices have steadily risen since 2020.

Overall, prices are still going up. But inflation has been slowing in the past year and the latest data shows the cost of groceries, at least, isn’t rising as fast as it once was. In fact, grocery prices are largely moderating, the most recent consumer price index (CPI) shows, even as the cost of eating out continues to climb. And a few supermarket categories actually got cheaper as they experienced deflation.

Food prices — which includes both food at home (groceries) and restaurant purchases — increased 2.6% from January 2023 to January 2024, according to the CPI report released Feb. 13 from the Bureau of Labor Statistics. By comparison, prices rose 10.1% over the previous one-year period in 2023.

The CPI uses indexes to measure changes in average costs of items in a given period. There are specific indexes for these items, including food costs.

Here are the broad strokes on food prices found in the latest report:

• The index for food at home is 1.2% higher year-over-year. From December to January, grocery costs rose by 0.4%.

• Restaurant patrons are still paying more (5.1%) for food than they did a year ago. And the price index rose 0.5% from December to January.

• Specifically, limited service meals (takeout only) rose 5.8% year-over-year, while full-service (sit-down restaurant) meals rose 4.3% year-over-year.

• Overall, the annual food inflation rate has been declining for more than a year.

Grocery prices don’t move uniformly. The latest CPI data show egg prices rose 3.4% from December to January — still one of the sharpest one-month increases among grocery groups tracked by the CPI. Egg prices rose sharply throughout much of 2022 and 2023, due to an avian flu. Despite the rise in prices in January, the cost of eggs is down 28.6% from a year ago.

The baby food and formula index saw the biggest annual change in the January report. Prices are 8.7% higher for those items than they were a year ago.

As a whole, food prices are expected to rise in 2024, albeit at a much slower pace than they did in 2023, according to the USDA Economic Research Service food price outlook released in January.

In fact, grocery prices could actually fall slightly in the coming year, the USDA, predicts, while the cost of dining out will probably rise at a rate similar to 2023’s increase of 5.2%.

The USDA relies on statistical modeling to forecast future food prices. It updates its annual outlook on a monthly basis.

Food prices have risen steadily since 2020 thanks to a combination of factors, including inflation, labor costs, the supply chain and the war in Ukraine.

These challenges won’t be resolved in 2024 but the economic outlook and overall inflation are improving.

Food production costs are estimated to increase 3.8% in 2024, which is slower than they did in 2023, according to the U.S. Department of Agriculture.

Labor costs are rising faster than inflation, but they’re also slowing down, according to the U.S. Bureau of Labor Statistics. This is a significant underlying factor because of the way higher wages and benefit costs ripple through the entire supply chain.

Ukraine’s food exports remain lower than pre-war levels but they’re increasing. Food exports from Ukraine, nicknamed “the breadbasket of Europe,” have historically accounted for 9% of the global wheat market and 12% of the corn market, according to the USDA’s Foreign Agricultural Service.

Other global crop supplies are estimated to increase in 2024, according to the USDA, which could bring prices down. But supplies of animal products like milk and eggs are estimated to decline this year.

Food prices are tracked by several federal agencies, including the Bureau of Labor Statistics and the Bureau of Economic analysis.

The Bureau of Labor Statistics tracks the CPI, which measures the change in average price that consumers pay for goods and services, including food. So the CPI is also a measure of inflation. 

In the CPI, the cost of food is of high relative importance to the overall index, compared to the other tracked goods and services. Food costs make up 13.4% of the index, to be exact. Its importance is second only to shelter (34.73%). But food prices, like energy, also tend to be more volatile, and for that reason it is usually left out of the “core inflation” version of the index.

The Bureau of Economic Analysis measures the personal consumption expenditures price index. The PCE tracks how much consumers spend on goods and services, as well as how consumers change spending habits in response to price shifts. Food is considered a non-durable good in its analysis. Core PCE — the Federal Reserve’s preferred measure of inflation — also excludes food and energy.