Restaurants, other services still in grip of high inflation

Keywords Economy / Inflation
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While prices for most goods have been falling throughout the year, inflation for a wide range of services remains high. That has put a strain on consumers eating out, servicing their cars and paying for various kinds of insurance.

Prices for services rose 3.7% in September from a year ago, according to the personal consumption expenditures price index, the inflation gauge of choice for the Federal Reserve. Prices for goods, though, have been falling, which has helped cool the overall rate of inflation nearly back to the Fed’s goal of 2%.

Restaurants, with traditionally tight margins and tough competition for diners’ dollars, are among the harder hit sectors dealing with stubborn inflation. Food services inflation rose 3.6% in September. Chains including Chipotle, McDonald’s and others say they expect inflation pressure from wages to continue.

Higher wages drive up costs for restaurants, often prompting menu prices to also rise. Pressure from rising wages increased following mandatory increases in minimum wages in California.

McDonald’s and other restaurants have tried to attract more cautious consumers with menu deals as the price of eating out rises compared with eating at home.

Home and car insurance inflation also remains stubbornly high. Household insurance premiums were up 10.1% from a year ago, while auto insurance was up 6%. Companies including Allstate and Progressive have said increased storm damage and more costly parts and labor for repairs are keeping prices high.

The housing market, particularly rent, has been one of the biggest drivers of services inflation. Overall housing costs rose 5.1% in September from a year ago. The travel sector is also facing sticky inflation. Air transportation costs rose 4.1% in September.

Prices for goods fell 1.2% in September and have been easing or cooling since late 2023, but pressure remains for food companies. Many of those companies are hesitant to pass along more price increases to consumers as people become more cautious about spending.

Overall, food and beverage prices rose 1.2% in September, with particularly big increases for items including milk, eggs and oils. Kraft-Heinz recently warned investors that inflation for things like coffee and dairy products will weigh on its margins and operating income for the year.

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7 thoughts on “Restaurants, other services still in grip of high inflation

    1. Explain how food prices are going to get lower when you deport all the people willing to work in your average meat processing facility.

      People who think Trump has good economic ideas don’t think through the consequences of his promises … if he does anything he promised, it will be an unmitigated disaster.

      Then again, Trump voters don’t seem to be bothered by voting for a liar. Remember “repeal and replace”? How about “infrastructure week”?

    2. Joe, that is Trump level hyperbole. Going to “deport all the people” working in a meat plant. It is also racist to assume everyone in the meat plant is an illegal immigrant, but Democrat racism is always acceptable. Inflation? I never heard anyone even ask for the details of your DEI Queen’s price controls, probably because it was completely fabricated and impossible to implement, but sounds good to people like you and Micah.
      Lying? The whole McDonalds thing was petty, but a great opportunity for your Queen. The sitting VP could have a staffer contact the IRS, get a redacted W2, post it and say “your turn Donny, still waiting on those tax returns”, except of course your Queen was lying and has never worked at McDonalds
      The fruitcake she wanted to be VP lied about being in Tiananmen. A particularly grotesque lie about an event where thousands of people were killed, but of course Democrat lying is ok.

    3. Queen? We got rid of royalty a few centuries ago in this country though apparently some want to bring it back. I’ve been voting for less-bad options the last few elections, Chuck, since Republicans have been nominating loons and voting out the people I find qualified to run the country. So angry they can’t think straight, as your compilation of crackpot thoughts shows.

      Go on. Explain to me how tariffs, which are paid for by consumers not producers, are a good thing. And explain how you’re going to get lower food prices by reducing the workforce. Step up to the adult table and make sense of it, since every economist tells us what I’m saying based off of decades of research and the alternative view is from a guy who has failed in business repeatedly and can no longer hold a coherent thought in public.

      Give us more than what you’ve been hearing on WIBC. I’ll wait.

  1. Joe, your assessment indicates that you feel the way to prosperity might be flying in unvetted, people from islands in the Caribbean in huge numbers in order to fill jobs at much lower pay/benefits for a multi national headquartered in Arkansas in order to ‘keep prices down’. All the while, putting small towns under stress with the influx of unannounced non-citizens when it comes to housing, hospitalization, schools, sanitation and the potential for increased crime. If that did manage to save ten cents on a package of thighs and wings,( which it won’t) ……most of us would rather pay the higher price…because Logansport and other places around the country will be paying the ‘bill’ for a long time.

    1. That’s not my assessment, but from your response I think yours is clear. Ten cents more? That’s adorable. Try double.

      Small towns are under stress, they’re dying. Go read the census numbers, people are fleeing them. You think that’s because a few immigrants came around or because the towns have no future? The only people who want to live in Logansport right now are people whose alternative is being murdered by gangs at home in Haiti. Hoosiers would rather live somewhere near Indianapolis where are their kids have better schools and the parents have better job opportunities.

      Logansport and a lot of other places will require the largest tax increases in history to become the sorts of places that Hoosiers want to live in. Massive investments in infrastructure and better schools. If you bothered to read Mike Braun’s plan for Indiana, he’s proposing the exact opposite. Investing in the future of the state is nowhere on the list.

      Like it or not, immigration is what’s powered this country for centuries. Hating on immigrants has been around just as long. It’s convenient to blame all your problems on immigrants, but the reality is that the people you’re voting for are likely more of the cause. The only crime the police chief in Logansport reported is people who can’t drive.

      If you want to see how a country does when it closes its borders and refuses to accept any immigrants, combined with a populace that isn’t having kids anymore because they can’t afford it, check out how well Japan is doing these days.

  2. It is indeed an interesting economic theory that kicking out persons willing to work at lower wages will somehow tame inflation. That belief is one of many that makes me so concerned about Trump as President.

    Inflation is a result of higher costs being passed onto the market. Higher costs come in many forms. Higher wages, higher taxes, government monetary policies that give out funds to all taxpayers regardless of need (as in Trump’s CARES act of 2020). It also is brought about by supply side shortages, such as inability to acquire goods or services.

    Post COVID, people have been less willing to go back to work at low wage jobs. COVID taught many that life is too short to work at such unrewarding jobs. Long hours, low pay, high levels of customer disrespect. So, there is a labor shortage at many restaurants, and to cure that issue restaurants are actually having to pay staff higher wages. That’s causing inflation in restaurant pricing.

    During COVID, people learned to be at home and cook again. and to eat together as a family. Post COVID, they know they can knock together a burger or taco, and don’t need to go out for these. More formal dining, or variations such as Asian cooking, they will go out for, and are willing to pay higher prices.

    Food shortages caused by disease, such as with eggs, chicken, turkey, also impact pricing. Shortages of federal food inspectors are many plants are causing massive recalls of beef and other food products. That causes price strain on the remaining supplies.

    Everyone, salaried or hourly, who got a raise in the past four years, is a contributor to inflation. Want to help cure inflation, give your raise back.

    Rising prices due to supply chain shortages abound, three years post-COVID shutdowns. Finding some car parts, siding, roofing, timber, are all more expensive and in short supply. If I can’t drive my car or truck because they don’t have the part, that drives up expenses.

    This is a really simplified explanation. But tell me how Donald Trump and his MAGAts will cure these issues as they deport labor, the same labor that will help rebuild Flordia and the Southeast, and harvest the food. The agricultural market is in a panic regarding the border; that’s where they get the workers to harvest food. They know average Americans aren’t going to work that hard for so little money.

    So two months from now, if Alan R is to be believed, Trump will cure these issues, many of which started in his last administration. Remember, iflation was increasing in early 2021, prior to any Biden legislation being passed. It’s been on the decline since mid-2023. A two year spike largely caused by government spending by Trump on individual hand outs, Biden on infrastructure.

    Trump plans for tariffs will, by all economists analysis, increase inflation. His numerous tax plans will simply increase the debt and the disparities between the wealthy and the rest of the citizenry. His foreign relations plans will unnerve our allies, and cause them to make new alliances with China and Russia.

    If you believe that Trump has a workable, realistic anwer for any of this, then I have uncharted islands to sell you in the south Pacific…

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