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If you’ve opted to cook a romantic meal at home with your partner this Valentine’s Day, no matter how it turns out, know that you’re saving a decent amount of money compared to couples dining out.
Even excluding expensive Valentine’s Day menus, it’s becoming cheaper for Americans to eat at home instead of dining out, according to January Consumer Price Index data. This is because grocery prices increased by 1.2% year over year, while the price of food consumed in restaurants increased by 5.1%.
It’s another reminder of the pain inflation is having on Americans’ daily lives. Although price increases are slowing, prices remain much higher than before the pandemic, which has led people to feel miserable about an otherwise strong economy.
And in this election year, rising food prices, which rose last month to their highest monthly rate in a year, could present problems for President Joe Biden’s campaign.
While the pace of inflation for groceries and restaurant food has slowed significantly since last year, the gap between the respective paces of price increases has widened.
In January 2023, dining out was cheaper and food prices increased by 8.2% compared to the previous year. Grocery prices increased 11.3% year over year.
What is behind the change?
In the post-pandemic world, consumers have dedicated more of their budgets to services than goods. Demand for services has been putting upward pressure on wages, which, in turn, has contributed to rising prices.
“The wage pressures are there,” Dana Peterson, chief economist at the Conference Board, said in an interview. The biggest increases in payrolls are in sectors such as healthcare, government and leisure and hospitality, he noted. “Leisure and hospitality includes restaurants, so there is still a lot of attrition, and those businesses are having to increase wages to attract and retain labor.”
“We believe many of these increases reflect the lagged effect of strong wage growth in 2023, and we believe wage growth is now slowing,” Goldman Sachs economists said in a note on Tuesday.
Overall, prices for services, including dining out, transportation and entertainment, rose 0.7% in January compared to the previous month. This represented 148% of the overall monthly price increase of 0.3%.
Fresh vegetables are starting to have a very high price.
Prices for that food category rose 2.4% last month. The most notable increase occurred in tomatoes, which cost 4.6% more in January compared to December.
Two related factors are behind that increase, said Timothy Richards, president of the School of Agribusiness at Arizona State University.
Tomato prices were much lower in 2022, making increases in the following months appear much larger. Because farmers couldn’t sell tomatoes as cheaply, they began allocating more space to products with higher yields and profits, Richards said.
“With high prices, wait a few months and the problem will solve itself,” he told CNN.
Across all goods and categories tracked by the CPI, prices for frozen still juices and beverages were the highest over the past month and year. On a monthly basis, prices rose 9.9% and for the 12 months ending in January, they rose 29%. The weather (hurricanes in particular) can probably be blamed for that, as well as a devastating citrus disease.
On the other hand, ham and non-perishable fish and seafood experienced the largest price drops in all food categories analyzed in the CPI.
Ham prices fell 3.1% last month and non-perishable fish and seafood prices fell 2.9%.
But on a year-over-year basis, eggs remained the winners of the largest price declines (-28.6%) across the CPI. That may not be the case for much longer, given that egg prices rose 3.4% last month from December, as bird flu is once again hitting the industry.
Lettuce (-11.7%) and apples (-8.9%) ranked second and third for the biggest annual food price declines.