Grocery prices and the costs of dining out at restaurants both moved higher in January, according to the latest Consumer Price Index (CPI) data. Yahoo Finance Retail Reporter Brooke DiPalma breaks down the inflationary pressures weighing on food prices and restaurant chain operators.

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Inflation data out this morning signaling a widening gap between the cost of dining out and for groceries consumed at home. With more on what's driving those inflationary pressures, we've got Yahoo Finance's Brooke DiPalma. Brooke.

BROOKE DIPALMA: Good afternoon, Josh. I mean, certainly, grocery prices are something that we've been watching for the past, what, three years. It sure feels like it's weighing on Americans. But certainly, that cost to dine out actually outpacing the rise of inflation when it comes to the food segment of the CPI report out today.

And largely, what we're seeing here is labor inflation running ahead of commodity inflation. And that's causing the rate of inflation for dining out to continue to rise. And what's really pressuring here right now is this limited service menu prices within this dining out category.

That segment alone within the CPI report jumped 5.8%, largely driven by, once again, labor inflation. And last month, at the start of the year, we saw 22 states raise their minimum wage. Florida, Nevada, Oregon, they're also expected to raise their minimum wage later on this year.

And we're also keeping a close eye on that FAST Act. That's set to go into effect in California on April 1st. That will raise minimum wage there up to $20 per an hour. And so when you think about this rise of cost of food, this labor inflation really weighing on that. And that's why Americans are maybe thinking twice about dining out.