The popular menu item, the signature chicken sandwich, used to cost less than $5 in 2021 and $6.99 in New York City, but prices have increased significantly by 21% over the last two years due to price increases by the fast-food giant Chick-fil-A. Similar price increases have been made to the eight-piece chicken nuggets, which are now $5.95.
Expanding Disparity with CPI Inflation Rate
The Consumer Price Index (CPI) inflation rate, which showed a meager 3.1% increase in November, is in stark contrast to the Chick-fil-A price surge. In November, the Bureau of Labor Statistics reported a minor increase in the food index of 0.2% per month, which is less than the 0.3% increase in the previous month. The growing discrepancy between the rate of CPI inflation and the Chick-fil-A price increase begs the question of what factors are causing the surge.
A rise in the minimum wage and rising food prices
A plausible contributing factor could be the recent increases in wages in multiple states. The minimum wage in New York has risen to $16 in some areas and is expected to reach $17 by 2026 as part of a statewide wage-hike initiative. About thirty states have minimum wages higher than the federal minimum of $7.25 as a result of similar increases in minimum wages in states like Connecticut and California, which now stand at $16 and $15.69, respectively. It is believed that these wage increases are a factor in the nation’s rising food prices.
Possible Effects on the Fast-Food Sector
The National Taxpayers Union’s Brandon Arnold made a comment regarding how the fast food industry might be affected by these wage increases. He suggested that businesses may need to either raise prices or look into ways to cut labor costs in order to deal with the rising wages. This raises questions about future prices for goods like the Big Mac from McDonald’s, which might go up to $15 in states with higher minimum wages.
Although the precise cause of Chick-fil-A’s price increase is still unknown, the combination of rising inflation and pay increases appears to be a likely contributing factor, suggesting a possible trend for the fast-food sector as a whole.