The results are now in for 2022, and it shows that whether you ate out or stayed in, you were paying more. Below, we explain this mysterious CPI and take a look at why rates were so high, although, at this point, that may be obvious.
The Consumer Price Index (CPI) measures the change in the price of a basket of goods and services over time. The basket is designed to represent the consumption patterns of the average household, and the index is used to measure inflation in the economy. One of the components of the CPI is the food and beverage category, which is further divided into two subcategories: food at home and food away from home.
According to the Bureau of Labor Statistics, the CPI for food away from home rose by 8.3% in 2022, while the CPI for food at home rose by 11.8%. This means that the cost of eating out at restaurants and other food establishments increased at a slower rate than the cost of food purchased for consumption at home.
Of course, it is true that many restaurants were opened to full capacity in 2022, but some consumers may still have chosen to continue cooking at home and avoided eating out due to the uncertainty caused by the pandemic or health concerns.
Another factor that may have contributed to the slower increase in the cost of food away from home was the competition among restaurants. With many restaurants reopening, there may have been more options for consumers, which could have led to increased competition and downward pressure on prices. Some of this played out between fast-food restaurants and full-service restaurants, with the former winning, in most respects. Fast-food, with its inherently lower prices, took full advantage of rewards programs and poured a ton of money into fully realizing their digital footprint.
Lingering supply chain disruptions caused by the lockdowns and war, in turn, contributed to the increase in the cost of food at home. The lockdowns caused disruptions in the global food supply chain, leading to shortages and higher prices for some food items. Avian flu drove poultry and egg prices sky high, and the invasion of Ukraine drove cooking oil prices and wheat prices upward. That latter catastrophe also drove energy prices up, which drove food prices up. Tractors and combines need fuel and farms need fertilizer, something that became hard to attain when Russia invaded Ukraine, as they are among the largest producers of the stuff.
To be sure, the above external factors also affected restaurants, but in many cases, professional food service was spared what civilians suffered by having greater purchasing power. Still, it was many a restaurant owner that complained all throughout 2022 about high costs, particularly concerning eggs, meat, flour, and lettuce.
To conclude, the Consumer Price Index (CPI) for food away from home rose by 8.3% and food at home by 11.8% in the past year. The slower increase in food away from home is likely due to the lingering disruptions caused by the lockdowns on the restaurant industry, increased demand for food at home, supply chain disruptions, war, and avian flu. These changes in food prices are likely to continue to affect consumers’ spending habits and the overall economy in the near future.