Menu Prices
Consumer prices edged up 0.1% in May, easing from the 0.2% gain in April. Food prices rose 0.3%, rebounding from a 0.1% decline in the previous month, while restaurant menu prices continued to climb steadily, also up 0.3% for the month. Energy costs fell 1.0%, with gasoline prices down 2.6%—the fourth straight monthly decline.
Year-over-year, overall consumer inflation rose 2.4%, up slightly from 2.3% in April, which marked the lowest rate since February 2021. Core CPI—which excludes food and energy—also increased 0.1% in May, down from 0.2% in April. On a year-over-year basis, core inflation held steady at 2.8% for the third consecutive month, the slowest pace since March 2021.
Price trends within core categories were mixed. Increases were seen in medical care commodities (+0.6%), household furnishings and supplies (+0.3%), shelter (+0.3%), and medical care services (+0.2%). Meanwhile, prices fell for used cars and trucks (-0.5%), apparel (-0.4%), new vehicles (-0.3%), and transportation services (-0.2%).
The Federal Reserve is maintaining a cautious posture, signaling that rate cuts remain possible later this year but are unlikely at either of its next two meetings on June 17–18 and July 29–30. Potential tariff-related cost pressures could complicate the inflation outlook in the months ahead.
Menu and grocery store prices rose strongly again in May
Menu prices rose 0.3% in May, building on the 0.4% gains seen over the previous three months and continuing a solid upward trend. Over the past year, the Consumer Price Index (CPI) for Food Away from Home increased 3.8%, a slight dip from April’s 3.9% pace—the highest in seven months. While menu inflation has remained firm, it is still well below the peak of 8.8% recorded in March 2023, the fastest rate in over two decades.
Meanwhile, grocery prices increased 0.2% in May (seasonally adjusted), rebounding from a 0.3% decline in April. (Note: On a non-seasonally adjusted basis, prices fell 0.4% in April and rose 0.3% in May.) Year-over-year, the CPI for Food at Home rose 2.2%, up from 2.0% in April. Grocery inflation has cooled considerably from its peak of 13.5% in August 2022—a significant shift for both consumers and restaurant operators.
In the food-away-from-home category, menu prices at both full-service and limited-service restaurants rose 0.3% in May. For limited-service establishments, it marked the second consecutive month of 0.3% growth. In contrast, the latest gain for full-service restaurants signaled some easing, following back-to-back increases of 0.6% in March and April.
On a year-over-year basis, full-service menu prices were up 4.2% in May, a slight pullback from April’s 4.3% rate—the highest in 15 months. Limited-service prices increased 3.5% over the past year. While both segments continue to see elevated inflation, the pace of growth has moderated significantly from recent peaks: full-service prices surged as high as 9.0% year-over-year in 2022, while limited-service prices peaked at 8.2% in April 2023.
Within the broader food-away-from-home category, prices for food at employee sites and schools rose 0.4% in May—a three-month high following no change in April. In contrast, prices from vending machines and mobile vendors were flat in May, easing after sharp gains of 2.0% in March and 1.2% in April.
Year-over-year, vending and mobile vendor prices have risen a solid 5.4%. Prices at employee sites and schools are up 3.9% over the past year, while the broader “other food away from home” category posted a 4.4% annual increase in April.
Regionally, the West posted the fastest menu price growth in May, with a 4.4% year-over-year increase. Other regions saw more modest and closely aligned gains, with menu prices up 3.7% in the Northeast and 3.6% in both the Midwest and the South.
