On Wednesday October 22nd it was announced that Food Prices were once again on the rise during the month of September. According to data provided by the Bureau of Labor Statistics, Food Prices (which get stripped out of the core CPI number) rose 0.3% on a month-over-month basis and 3.0% on a year-over-year basis. Included in this data were a number of key indicators that may not only impact a majority of the names in the Grocery Store and Quick Service Restaurant Sectors but may also impact the way we as consumers decide what it is we're having for dinner.

So what exactly does this mean for everyday home food shopper? From a home food shopper’s perspective, it means that prices for food consumed at home have increased 3.2% on a year-over-year basis and that increase may have a considerable impact on what it is we eat for dinner. For example, if the home cook was paying an average of $10 per meal in September 2013 from either a Whole Foods Market (WFM) or a Kroger (KR), they are now finding themselves paying an average of $10.32 for the same meal purchased at those same stores just one short year later.

Based on their most recent year-over-year increase I strongly believe we could see a 3%-to-4% increase in retail food prices (such as meat, produce, & dairy products) over the next 3-to-6 months and as much as a 5% increase in retail food prices within the next 12 months.

What does this mean for the Quick-Service Restaurant sector? In short, it means increased prices across the board and a much harder hit to one’s wallet when longing for that fast-food fix. The increase in prices and the harder hit to one’s wallet is due in large part to the fact that the average price of beef increased a whopping 18% on a year-over-year basis. For example, if the QSR consumer was paying an average of $2 per specialized beef burger/sandwich in September 2013 from either a McDonald’s (MCD) or a Wendy’s (WEN), they are now finding themselves paying an average of $2.50 for the same product purchased at the same restaurants just one short year later.

Based on their most recent year-over-year increase I strongly believe we could see a 6%-to-10% increase in beef prices over the next 3-to-6 months and as much as a 12% increase in beef and other meat prices within the next 12 months.

Conclusion

With food prices on the rise, it is in our best interest as both consumers and potential investors to pay very close attention to how price trends behave over the next 12-18 months. If, on one hand, food prices continue to rise, then there’s a very good chance we could see the landscapes of both the “home cooked meal” and the so-called “value meal” market change significantly (and by changes I’m referring to both price point and portion size). If, on the other hand, food prices buck their current trends and begin to taper off, then and only then will consumers see a positive change in what they are spending on a daily and weekly basis for each meal whether its prepared in the comfort of their home or at the drive-thru window of a QSR.