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Counting the cost of going out to eat

The cost of going out to eat is rising faster than eating at home.

The latest U.S. Department of Agriculture Economic Research Service food price outlookreports that food away from home (restaurant food) prices in October were up 2.5% higher than year-ago levels.

In contrast, the USDA said that food purchased at grocery stores was just 0.1% higher than th

“Between the 1970s and early 2000s, food-at-home prices and food-away-from-home prices increased at similar rates,” the report said. “Since 2009, however, food-at-home and food-away-from-home price growth has diverged.”

While grocery prices have show signs of price deflation in recent years, restaurant prices have steadily increased, according to the USDA.

The different price responses are attributed, in part, to variations in the cost structure of restaurants versus supermarkets or grocery stores. Labor and rental costs are a bigger factor with restaurants than grocers, the USDA said.

“For this reason, decreasing farm-level and wholesale food prices, which have exerted downward pressure on food-at-home prices, have had less of an impact on restaurant menu prices.

Outlook

For 2018, the USDA said retail food prices are expected to change between zero to 1%, below the 20-year historical average of 2.1%.

The USDA said that while fats and oils, pork, nonalcoholic beverages, dairy, and processed fruits and vegetables could potentially decline in price, prices for beef and veal, poultry, fish and seafood, eggs, and fresh fruits and vegetables are expected to increase. 

“Due to deflation in 2016 and 2017, expected price increases would still leave overall price levels in 2018 lower than in 2015,” the USDA said.

For 2019, the USDA said retail prices are expected to rise between 1% and 2%, which would mean the fourth year in a row with lower-than-average inflation.

Fruits and Vegetables

Retail prices for fresh fruits in October were down 1.5% compared with October 2017, with apple prices off 3.6% and banana prices were off 0.7%.

The USDA expects fresh fruit prices to increase 1% to 2% in 2018 and increase 2% to 3% in 2019. 

Retail fresh vegetable prices in October were 0.7% higher than in October 2017. Fresh vegetable prices are expected to change between zero and 1% in 2018 and increase an additional 2.5% to 3.5% in 2019.

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