Few prices are as visible to Americans as the ones they encounter at the grocery store or drive-through window, which is why two years of rapid food inflation have been a major drag for U.S. households and the Biden administration.
Shoppers have only slowly regained confidence in the state of the economy as they pay more to fill up their carts, and President Biden has made a habit of shaming food companies — even filming a Super Bowl Sunday video criticizing snack producers for their “rip off” prices.
But now, the trend in grocery and restaurant inflation appears to be on the cusp of changing.
After months of rapid increase, the cost of food at home climbed at a notably slower clip in January. And from packaged food providers to restaurant chains, companies across the food business are reporting that they are no longer raising prices as steeply. In some cases that’s because consumers are finally pushing back against price increases after years of spending through them. In others, it’s because the prices that companies pay for inputs like packaging and labor are no longer rising as sharply.
Even if food inflation cools, it does not mean that your grocery bill or restaurant check will get smaller: It just means it will stop climbing so quickly. Most companies are planning smaller price increases rather than outright price cuts. Still, when it comes to the question of whether rapid jumps in grocery and restaurant prices are behind us, what executives are telling investors offer some reason for hope.
Some, but not all, consumers are saying no.
Executives have found in recent months that they can raise prices only so high before consumers cut back.
