Inflation slowed in November as consumer prices on items from potatoes to apparel declined last month, providing some hope that a months-long run of historically high price hikes is at an end.
One exception: Menu prices in foodservice.
The Consumer Price Index declined 0.1% in November, the U.S. Bureau of Labor Statistics said on Tuesday. It remains up 7.1% on an annual basis, still more than three times the target rate the U.S. Federal Reserve sets to guide its interest rate decisions.
But food away from home, which includes restaurants, bars and noncommercial foodservice providers, was up 0.5% for the month and remains up 8.5% for the year.
Some of that is due to the end of free school lunch programs in many states. Yet full-service restaurants raised prices 0.4% in November while limited-service meals rose 0.6%. For the year, prices are up 9% and 6.7% at full-service and limited-service restaurants, respectively.
The overall data generated some hope that the Federal Reserve could temper its interest rate decisions over the coming year—perhaps enough that the economy can avoid a recession.
The inflation data helped send stocks higher on Tuesday. The S&P 500 Index was up 0.72% through late afternoon trading.
Restaurant stocks, however, were mixed, with roughly half of the publicly traded companies declining.
Restaurants may be keeping their foot on the price-increase gas a little too long.
Prices for food at home were flat last month. While grocery prices are up 12% over the past year, menu prices have increased faster of late. As such, restaurants could lose one advantage that has kept customers coming in and paying high prices despite historically high inflation.
Easing inflation could help consumer spending, however. Gas prices were down 3.3% last month, continuing a months-long slowdown. A gallon of gas is now less than 10% higher than it was a higher ago. At times during the summer, it was up well over 50%.
Consumer prices for meats, meanwhile, were down 1% in November. Potatoes were down more than 8% last month. The prices for women’s outerwear were down 6.3%.
Other prices were still up, such as gift wrap, wireless phone services and personal care services.