- The decades-old "pizza principle" states that a slice of cheese pizza in New York City costs about the same as a subway fare.
- Now, for the first time in decades, a cheese slice costs significantly more than a subway fare.
- Food prices are rising fast because of inflation caused by the pandemic and the Ukraine war.
Soaring food price inflation caused by the pandemic and the Ukraine war seems to have put paid to a decades-old economic principle that links the cost of pizza to subway fares.
New York City's "pizza principle," which dates back to at least 1980, states that a slice of cheese pizza and a subway fare should cost roughly the same at any given point in time.
The principle held true for decades but it's under threat today. That's because the average cost of a cheese slice in NYC is now $3.14, according to data from Slice, an online ordering service, which was cited by Bloomberg. Meanwhile, a subway fare is $2.75, according to the city's Metropolitan Transportation Authority (MTA).
And the price difference could widen further in 2022: New York Governor Kathy Hochul has proposed a budget that would freeze MTA fares for the year. Meanwhile, food price inflation continues to mount.
The pizza principle appears to have been first posited in The New York Times in 1980, by patent attorney Eric M. Bram. In 2014, Jared Lander, a statistics professor at Columbia University, conducted a comprehensive study of pizza and subway costs and concluded the principle had held the test of time.
Now the city's beloved cheese slice is up against rising commodity and fuel prices.
Gas prices in the US reached historic highs in recent weeks because crude oil prices surged after Russia's invasion of Ukraine, and President Joe Biden vowed to halt Russian energy imports. Skyrocketing gas bills are impacting pizzerias, Bloomberg reported.
Additionally, the cost of cheese rose by 5.2% in the 12 months to February 2022, and cereal and bakery product prices climbed by 7.8% in the same period, according to the US Bureau of Labor Statistics. Record-high prices for wheat due to the Ukraine war are also a factor: Russia is the world's largest wheat producer and Ukraine is the fifth-largest.
And then there are rising labor costs. Average wages in New York's food and accommodation sector rose from $7,228 to $8,447 from the third quarter of 2020 to the same period in 2021, according to the New York State Department of Labor.