The cost of eggs stood out in Thursday’s CPI report – up 59.9% year-on-year and 11.1% month-on-month from November to December.
This was the largest monthly increase since April 2020 and the largest annual increase since September 1973, according to Bureau of Labor Statistics (BLS) economist Steve Reed.
Eggs, he said, single-handedly lifted grocery prices in December, which rose 0.2% month-on-month. “If you remove the eggs in one way, if you remove the eggs [the ‘food at home’ category], would be almost straight. Eggs accounted for more than 90% of this increase,” he said. According to December data, the price of 10 large eggs was $4.25.
What is behind the price increase? Bird flu epidemic.
“The total size of U.S. egg-laying flocks is expected to decline by about 10% as nearly 40 million egg-laying chickens contract disease and die in 2022,” Wells Fargo Agri-Food Institute analyst Kevin Bergquist told Yahoo Finance.
As a result, the total egg production decreased by about 5%.
David Anderson, a professor in Texas A&M’s Department of Agricultural Economics, said production costs also contributed to the record high prices.
“Feed costs have been very high for a number of years now. As feed prices have gone up, so have profits, and the economic response to that is to produce less, so we’ve been producing chickens that are laying a little bit less eggs anyway. [avian flu] hits,” he said.
Anderson added, “A small change in supply or the quantity produced creates a larger increase in price. In other words, if the price goes up, consumers will buy eggs anyway, or not much at all. There’s really no substitute for eggs in my egg McMuffin or my omelette.” . You should almost have eggs.”
In addition, he said, holiday breads have led to an increase in demand.
The effect on retailers?
As a result of supply issues, some retailers are restricting customer purchases of eggs.
On Nov. 29, Yahoo Finance spotted this sign at BJ’s Wholesale Club limiting 2 egg cartons per customer. BJ did not respond to a request for comment.
A Whole Foods in Brooklyn recently implemented a similar restriction.
Other major retailers are suspending restrictions.
A Target (TGT) spokesperson told Yahoo Finance: “While we are experiencing low inventory on some egg products, it ultimately depends on the brand. We are not limiting guest purchases at this time.”
The current average selling price for 12 units of Target’s private label Good & Gather regular eggs is $4.26, which is one percent higher than the current national average for U.S. cities.
A Walmart spokesperson told Yahoo Finance: “While some parts of the country have experienced some supply constraints, we are currently seeing an improvement in egg supply and have recovered from a difficult holiday season with very high demand and the effects of bird flu… We have no restrictions on eggs. “.
When will prices drop?
As Easter approaches, it may take some time for consumers to see relief in egg prices.
“We typically see egg prices peak in the spring, especially table eggs, because of Easter and Easter egg hunts. That increases egg demand and prices. It’s going to increase very soon, so demand will keep egg prices high in the coming months,” Anderson said. .
Anderson is optimistic.
“Going further into 2023, I expect that production increases will begin to catch up and outpace disease losses, so production will expand, we’ll return to 327 million egg layers and prices will come down,” Anderson said.
Wells Fargo’s Bergquist was also confident: “We expect a modest decline between now and Easter when prices pick up again. However, we do not expect a return to pre-bird flu levels. will rebuild, increasing egg supply and helping to moderate high egg prices in the long term. Summer egg prices are typically well below the holiday season, and this could repeat in 2023.”
And according to the USDA, inventory is rising and prices are starting to fall.
“In the last week of 2022, inventory levels began to increase and prices fell. Going forward, wholesale prices are expected to decrease as the industry moves through the holiday season and continues to rebuild laying flocks.”
Brooke DiPalma is a reporter for Yahoo Finance. Follow him @ TwitterBrookeDiPalma or email him at email@example.com.
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