Restaurants hope inflation will start to come down
After inflation hit a 40-year high in June, the latest Consumer Price Index (CPI) report for July shows signs of improvement. The CPI takes into account all goods and services, including food, housing, clothing, transportation, and the cost of cars, among others.
The all-items index rose 8.5% in the 12 months to July. Inflation was 9.1% for the 12 months ending in June.
The CPI for all urban consumers remained unchanged in July, after increasing in June.
“If you were to take that same basket of goods and look at it from June to July, it looked almost flat, so I think that’s good news for the consumer,” said Tyler Schipper, associate professor of economics at the University. ‘University of St. Thomas. . “A lot of what has made the CPI stagnant this time around is that gasoline prices have fallen since mid-June, so the fall in energy prices has somehow so compensated for some increases in other areas such as food and housing.”
The cost of gasoline fell in July, but the food index rose 1.1%, the seventh consecutive monthly increase of 0.9% or more.
At Fhima’s Minneapolis, chef David Fhima has adjusted the menu to account for rising costs.
“Even if we decided to raise prices to match inflation, we would have to charge you $80 for a bowl of pasta, literally, and we can’t do that,” he said. “So we have to bite the bullet right now and hope it gets better soon, trying to get creative with the menu items.”
He started noticing prices rising in the spring and initially thought it was related to the volatility of the pandemic.
“As soon as I saw an invoice that seemed to be priced wrong and asked our accounting, ‘Can you check that and do a comparison?’ and every element was higher, every one of them,” Fhima said. “We saw it crawling, but now it’s really, really bad.”
Rising gas and food prices over the past few months have affected how much they pay for delivery prices and basic necessities to run the kitchen. The price of flour has doubled, according to Fhima.
“You see this just about everywhere – flour, dairy, milk, poultry,” Fhima said.
Still, Fhima told 5 EYEWITNESS NEWS he was encouraged by the latest CPI report.
“Our bread and butter in our industry is hope,” he said. “Yesterday’s data, which was more tangible, added a bit more reality to the hope.”
The average gasoline price fell below $4 a gallon this week.
“There’s a kind of hope that if energy prices go down, food prices will follow,” Schipper said. “It takes time for gasoline prices to start coming down, and then it can help food prices come down as well, because transportation costs are part of that.”
He hopes July’s CPI report could reflect a turning point for the economy. The data was released just two weeks after the Federal Reserve raised interest rates by three-quarters of a point to the highest level in four years.
“Maybe it changes their mindset a little bit that maybe they’ll raise rates, but they’ll probably raise them less than if we had seen inflation rise even more,” Schipper said. “Inflation was never going to fall to that 2% in a month, so if we see another report next month that sees inflation falling a little bit more and a little bit more, I think that’s the healthy trajectory that we are looking for.”