Rising gas prices (up 21.2 percent) led to a 0.9 percent jump in consumer price in March, a steeper result than February’s 0.3 percent, and the largest monthly increase since June 2022.
Food prices didn’t change, but menu figures climbed 0.2 percent. Headline inflation hiked 3.3 percent, year-over-year, in March. That, too, was a sharp spike from February (2.4 percent) and the loftiest since April 2024.
Dr. Chad Moutray, chief economist at the National Restaurant Association, said oil prices could retreat in the coming weeks if traffic flows to a near-normal pace in the Strait of Hormuz. “That outcome would provide welcome relief for consumers and the broader macroeconomy,” he said.
“Coming into this year, there were meaningful expectations for strong economic tailwinds, driven by tax incentives and the prospect of lower interest rates later in the year, that would fuel growth,” Moutray added. “A de‑escalation of the conflict involving Iran would help put that growth narrative back on track, particularly in the second half of the year, even with hurdles in the near-term. Conversely, the longer the conflict persists and energy prices remain elevated, the more consumers will be forced to make trade‑offs in their spending, potentially weighing on restaurant traffic and sales.”
Core CPI, a measure that excludes food and energy, increased 0.2 percent in March for the second consecutive month. Core inflation inched from 2.6 percent year-over-year to 2.6 percent.
For a larger picture, some increases included apparel (1 percent), transportation services (0.6 percent), shelter (0.3 percent), and new vehicles (1 percent). Medical care commodities, used cars, and household furnishings and supplies declined at negative 1, 0.4, and 0.2 percent, respectively. Medical care service prices didn’t move.
Inflationary pressures didn’t abate in March. And the Association expects prices to continue trending “somewhat higher” near-term, placing the Federal Reserve in a tough spot.
The labor market shows further signs of cooling, yet inflation persists and has drifted higher.
In turn, the Association said, the Federal Open Market Committee is likely to hold policy steady for the foreseeable future. Additional rate cuts could be possible this year, but appear unlikely until later on in the calendar.
“With energy costs sharply higher, consumers—already anxious about the economy and their household budgets—are becoming increasingly choiceful in how and where they spend,” Moutray said. “A softer job market has only added to those concerns. For restaurants, the labor market is often key, as people with jobs and solid income growth are more likely to eat out away from home. “
And in plain terms, gas prices haven’t helped.
“Restaurant spending has proven resilient over the past several years despite numerous headwinds,” he continued. “However, with consumer sentiment turning more cautious and gasoline prices eroding disposable income, that resilience is likely to be tested in the months ahead.”
As mentioned, menu prices climbed 0.2 percent in March after rising 0.3 percent in February. The average increase in menu prices over the past year has been 0.3 percent per month. They’ve bumped 3.8 percent since March 2025. Overall, menu inflation remains solid, although it is well below the 8.8 percent peak witnessed in March 2023—the fastest rate in more than two decades.
Yet in contrast, grocery prices were unchanged in March in seasonally adjusted data (down 0.2 percent otherwise). Over the past year, they’ve also averaged 0.3 percent growth per month, with 1.9 percent year-over-year expansion overall.
Menu prices upped 0.3 percent in full-service restaurants for the second consecutive month. Limited service ticked 0.2 percent in March. Sit-down restaurant menu prices have averaged 0.4 percent growth each month over the past year, up 4.3 percent since March of last year. For quick-service, they’ve increased 0.3 percent on average per month and 3.2 percent year-over-year.
Inflation in both moderated from earlier surges. Full-service restaurant prices climbed as high has 9 percent, year-over-year, in 2022. Quick service was at 8.2 percent in April 2023.
But could more price be coming? Restaurants don’t have a lot of margin to navigate around.
“From an operator perspective, the financial math was already challenging, and consumers were already seeking greater perceived value when dining out. In this environment, restaurants will need to continue leaning into perceived value,” Moutray said. “They will need to clearly articulate what makes their menu and overall experience worth the spend, while offering variety, innovation, and strong hospitality. In an increasingly competitive landscape, differentiation will be critical.”
“Restaurant operators have navigated extraordinary challenges over the past several years, and this represents yet another test,” he added of recent gas prices. “Success will depend on flexibility, adaptability, and the ability to respond to higher costs and a consumer base that is increasingly selective with its dollars.”
Regarding food-away-from home, prices at vending machines and mobile vendors lifted 0.5 percent in March. Menu prices at employee sites and schools were unchanged. Prices for other items increased 0.3 percent, easing from a 0.7 percent gain in February. Year-over-year, prices at employee sites and schools hiked 3.9 percent since March 2025, with prices at vending and mobile vendors up 3.2 percent. The broader category posted a 5.2 percent annual increase in prices in March, year-over-year.
Some more thoughts on gas prices
While macroeconomic pressures have driven a 1.8 percent decline in industry traffic for Q1 (not related to gas prices, exactly, more a wide-scope pressure thing), Black Box Intelligence recently shared some data to illustrate how rising gas prices could affect the industry. The answer, not evenly.
Rather, they’ll likely trigger a “massive trade-down effect” that will create winners and losers.
Analyzing same-store sales traffic growth against U.S. retail gas prices since 2017—outside of COVID issues—data surfaced a clear threshold. Historically, average monthly same-store traffic sits at negative 2 percent. When gas prices cross $3.50 per gallon, though, traffic drops to negative 2.4 percent. And when prices exceed $3.80 per gallon (also past that), traffic sinks to negative 2.9 percent.
Where will the traffic go? As fuel eats into discretionary income, per Black Box, guests are not necessarily going to abandon going out to eat—they’ll shift occasions to lower-price tiers.
This means a particularly negative correlation with family dining and rising gas prices; that’s where the steepest drops in traffic historically takes place, followed by casual dining.
Fast casual and QSR, meanwhile, appear poised to directly capture displaced traffic. Both show an acceleration in same-store traffic growth alongside rising gas prices. The most positive correlation being fast casual.
Black Box also observed a negative correlation with high gas prices and delivery, outside of one exception—QSR. Guests laddering down from higher-priced segments seem willing to absorb QSR delivery fees because the base price of the meal remains lower.
Upscale casual and fine dining remain insulated, according to Black Box. Traffic in those segments showed almost no relationship to gas prices, protected by a higher-net-worth guest base.
“When gas prices cross that $3.50 threshold, we don’t just see a reduction in consumer spending; we see a fundamental migration of market share,” said Victor Fernandez, chief insights officer at Black Box Intelligence. “For limited-service brands, this is a prime acquisition moment. You are receiving an influx of guests trading down from casual dining, and your primary goal must be execution and value perception to retain them. For full-service operators, the focus must shift immediately to what guests are telling them. You cannot out-price the gas pump, so you have to double down on the experiential factors—service speed, consistency, and perceived value—to ensure you don’t lose your core guest. Leaning into value offers—in particular—may provide some relief for those consumers who need it, offering a budget-friendly entry point into those brands.”
Fernandez advised brands should adequately contextualize performance by closely monitoring local market comps. “If your traffic is dropping faster than your specific segment and local market average, you can’t just blame gas prices. The macro environment is the catalyst, but execution is what determines if a guest trades down or stays loyal,” he said.
