The Consumer Price Index rose 3.7% in August, according to a report released this morning from the Bureau of Labor Statistics. This was a 0.6% uptick from the month prior, the biggest monthly jump since June 2022 driven by higher energy prices. It also marked the second monthly increase since July after 12 consecutive months of declines.

The index for gas prices was the largest contributor to the overall increase and remain stubbornly high in most markets, according to AAA, though many analysts expect those prices to come down now that the summer peak season is ending. Without energy factored in, core CPI inflation actually fell to 4.3%, which was more in line with expectations.

Meanwhile, the food index overall rose 0.2% in August, as it did the previous month. Food-at-home costs are 3.0% higher year-over-year after a 0.2% increase in August – down from a 0.3% increase in July.

Food-away-from-home prices are up 6.5% year-over-year after a 0.3% August increase, compared to a 0.2% increase in July, indicating that menu prices remain stubbornly high. That said, they’re well below where they were earlier this year and last year. Food-away-from-home prices rose 0.6% month-over-month in both February and March, for instance.  

And, limited-service meals were up 0.3% month-over-month, or 6.7% year-over-year, while full-service meals increased by 0.2% in August, or 5.2% year-over-year. This is compared to July, when full-service meals were up 5.8% year-over-year, while limited-service meals were up 7.1% year-over-year. This downward trend indicates that most commodity costs are easing.

In May, food-away-from-home prices were up 8.3%, including 8% at limited-service restaurants and 6.8% at full-service concepts.

Notably, August marks the sixth month in a row in which menu prices have outpaced grocery pricing after no such months throughout 2022. However, according to analyst Mark Kalinowski, it also marks the first month in the last six months in which sequential trends didn’t worsen, and the gap remains steady at 350 basis points. Still, the historical average between the two categories is about 60 basis points. Because of this gap, Kalinowski expects same-store sales in Q3 and Q4 to weaken versus Q1 and Q2.

August’s report will inform the Fed’s decision next week about whether to keep raising interest rates. Those increases began in 2022 when inflation hit 40-year highs and are now above 5%.

Contact Alicia Kelso at [email protected]