Restaurants, other services still in grip of high inflation even as overall rate slows
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
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
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
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.
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