If you’ve opted to cook a romantic meal at home with your partner this Valentine’s Day — no matter how it comes out — know that you’re saving a decent amount of money compared to couples dining out.
Even excluding pricey Valentine’s Day menus, it’s becoming increasingly cheaper for Americans to eat at home instead of dining out, according to January Consumer Price Index data. That’s because prices for groceries are up 1.2% year over year, while the price of food consumed at restaurants is up 5.1%.
It’s another reminder of the sting inflation is having on Americans’ daily lives. Even though price increases are slowing, prices remain much higher than they were before the pandemic, which has led people to have a miserable feeling about an otherwise strong economy.
And in this election year, higher 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 significantly slowed from last year, the wedge between the respective pace of their price increases has grown.
In January 2023, it was cheaper to dine out, with food prices up 8.2% compared to the prior year. Grocery prices were up 11.3% year over year.
What’s behind the shift?
In the post-pandemic world, consumers have been devoting more of their budgets to services compared to goods. Demand for services has been putting upward pressure on wages, which, in turn, has contributed to price increases.
“The wage pressures are there,” said Dana Peterson, chief economist at the Conference Board, in an interview. The biggest payroll gains are in sectors such as health care, government and leisure and hospitality, she noted. “Leisure and hospitality includes restaurants, and so there’s still a lot of churn, and those companies are having to raise 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.
As a whole, prices for services — which include dining out, transportation and entertainment — were up 0.7% in January compared to the prior month. That accounted for 148% of the overall 0.3% monthly increase in prices.
This story is developing and will be updated.
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