“I think in July when we redo the menu I will have to do a larger price increase because I’m getting battered - the cost of cheese and all the other ingredients are going up quite a bit,” he said. He may have to do it again, he said, with the rising cost inputs including food and labor. But in the second half of last year, he raised prices by 5 percent to try to keep up with increasing costs. John Wackerman, who has owned Galactic Pizza for five years, said he chose not to raise prices earlier in the pandemic because he felt like it would hurt business. Currently, it’s $15.05, or a dollar more than it was in 2018. The price for a 14” build-your-own pizza with just cheese at Galactic Pizza has risen modestly, by about 7 percent, since 2018. The pressures of rising prices are being felt by pizzerias. “When you’re baking a pizza, you’re still basically combining the same ingredients in the same way, using the same kind of oven that people have been for decades,” Wright said. That’s why the prices at restaurants tend to increase over time. Unlike with the production of durable goods, restaurants don’t get much more efficient over time. The big costs for restaurants are ingredients and wages for employees. Not so much with services, like eating at a restaurant. That’s because innovations in production make manufacturing more efficient, Wright said. Generally speaking, the price of physical goods that people buy tends to stay flat or fall over time, at least long-term. Given the general increase in prices, it’s not surprising that pizza prices would be up too, said Mark Wright, senior vice president and director of research at the Federal Reserve Bank of Minneapolis. The most recent report from the BLS found prices were up 7.9 percent in February over the previous year. Recently, though, it’s been higher, and rising enough so that many consumers are noticing. In recent years, inflation has been at or around 2 percent, as measured by the CPI. over time, to get a sense of how much more households are paying. This index is compiled by averaging the cost of a bunch of goods urban consumers buy - cars, clothes, meals out, etc. Source: Source: Bureau of Labor Statistics CPI Wayback Machineįor the overall economy, inflation is measured with a BLS mechanism called the Consumer Price Index, or CPI.
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