Egg prices stood out in Thursday’s CPI report — rising 59.9% year-on-year and 11.1% mom from November-December.
That was the largest monthly increase since April 2020 and the largest annual jump since September 1973, according to Bureau of Labor Statistics (BLS) economist Steve Reed.
Eggs, he said, have single-handedly pushed up the cost of groceries, which rose 0.2% mom. “If you removed eggs, if you took eggs out [the ‘food at home’ category], it would have been practically flat. Eggs accounted for over 90% of that increase,” he said. In December, the cost of large Class A eggs was $4.25 per dozen.
What is behind the price increase? The outbreak of bird flu.
“The overall size of the US egg-laying flock fell by about 10% when about 40 million layers were contracted by the disease and subsequently destroyed in 2022,” Kevin Bergquist, an analyst at the Wells Fargo Agri-Food Institute, told Yahoo Finance .
As a result, total egg production fell by about 5%.
David Anderson, a professor in the Department of Agricultural Economics at Texas A&M, said the cost of production also triggered record prices.
“Feed costs have been much higher in recent years. As feed prices went up, profits went down and the economic answer was to produce less, so we had produced a little fewer layers before anyway [avian flu] hit,” he said.
Anderson added: “A small change in supply or quantity produced results in a much larger price increase. In other words, if the price goes up, consumers will buy eggs anyway, or they won’t save much at all. There really is no substitute for an egg in my Egg McMuffin or my omelette. You just have to have eggs.”
In addition, the holiday baking has led to increased demand, he said.
Impact on retail?
Due to supply issues, some retailers are restricting customers’ egg purchases.
The story goes on
On November 29, Yahoo Finance spotted this sign at a BJ’s Wholesale Club, which limits 2 egg cartons per customer. BJ’s did not respond to a request for comment.
A Whole Foods in Brooklyn recently imposed a similar limit.
Recorded at a BJ’s Wholesale Club in New York on November 29, 2022 (Courtesy Yahoo Finance).
Other large retailers are reluctant to set limits.
A Target (TGT) spokesperson told Yahoo Finance: “While we are seeing low inventory on some egg products, it ultimately depends on the brand. We are not restricting guest purchases at this time.”
The current average retail price of 12-pack of Target Brand Good & Gather Conventional Eggs is $4.26, one cent higher than the current national average for US cities.
A Walmart spokesperson told Yahoo Finance, “While we have some regions of the country that have experienced some supply shortages, we are currently seeing an improved supply of eggs and have recovered from a challenging holiday season that has had very high demand and impact Avian flu… We have no purchase restrictions on eggs.”
When will prices go down?
With the Easter holidays just around the corner, it may be a while before consumers notice any relief in egg prices.
“We usually see egg prices highest in the spring, especially for table eggs because of the Easter and Easter egg hunts. This gives a boost to egg demand and egg prices. That’s coming pretty soon, so demand will likely keep egg prices high for months to come,” Anderson said.
However, Anderson is optimistic.
“My expectation is that as 2023 progresses, production increases will start to catch up and outpace disease losses, so production will increase, we’ll get back to about 327 million egg layers, and prices will come down,” Anderson said.
Wells Fargo’s Bergquist was also optimistic, saying: “We expect a slight drop by Easter, when prices are likely to pick up again. However, we do not expect a drop to pre-bird flu levels. As the outbreak subsides, flocks of birds will slowly rebuild over the next six months, increasing egg supplies and helping to mitigate high egg prices in the long term. Summer egg prices are usually much lower than during the holiday season and that could happen again in 2023.”
And according to the USDA, inventories are rising and prices are starting to fall.
“In the last week of 2022, inventories started to rise and prices started to fall. Going forward, wholesale prices are expected to fall as the industry moves through the holiday season and rebuilds its egg-laying herds.”
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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