As a Result of a Shortage in Some Retail Locations, Egg Prices Skyrocket by Nearly 60%

In Thursday’s CPI report, the price of eggs stood out because it increased by 59.9% year-over-year and 11.1% month-over-month from November to December.

According to economist Steve Reed at the Bureau of Labor Statistics (BLS), this was the largest annual increase since September 1973 and the largest monthly increase since April 2020.

He claimed that eggs alone contributed to the 0.2% month-over-month increase in grocery prices in December. Eggs would have been virtually flat if you kind of removed them from the “food at home” category. “Over 90% of that increase came from eggs,” he stated. Grade A large eggs cost $4.25 per dozen as of December.

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What is the cause of the price increase? The spread of the avian flu.

According to Wells Fargo Agri-Food Institute analyst Kevin Bergquist, “the total size of the U.S. egg-laying flock decreased by about 10% when approximately 40 million laying hens caught the disease and were subsequently destroyed in 2022.”

As a result, approximately 5% fewer eggs were produced overall.

According to David Anderson, a Texas A&M professor in the Department of Agricultural Economics, production costs were also the cause of record-high prices.

Feed costs have increased significantly over the past few years. “We had been producing slightly fewer egg-laying chickens anyway, prior to the [avian flu] hitting,” he stated. “The economic response to that is to produce less. As feed prices went up, profits went down.

Anderson continued, ” A much larger price increase is caused by a small shift in supply or production quantity. To put it another way, if the price goes up, people will still buy eggs, or they won’t cut back at all. In my omelet or egg McMuffin, there really is no substitute for an egg. You absolutely must have eggs.”

He added that holiday baking increased demand as well.

What happens to retailers?
Some stores are restricting customers’ egg purchases due to supply issues.

This sign limiting customers to two egg cartons was found at a BJ’s Wholesale Club on Nov. 29 by Yahoo Finance. A request for clarification was not received by BJ’s.

Similar restrictions were recently imposed by Whole Foods in Brooklyn.

Limits are being deferred by other major retailers.

Yahoo Finance was informed by a Target (TGT) spokesperson: Even though we are running out of some egg products, the brand ultimately matters. At this time, we are not restricting guest purchases.”

Target’s private label 12-count conventional eggs are currently selling for $4.26 on average, one cent more than the national average for U.S. cities.

Yahoo Finance was told by a spokesperson for Walmart: We are seeing an improved supply of eggs right now and have recovered from a challenging holiday season that had very high demand and impacts due to avian flu… We do not have any purchase limits on eggs.” Although some regions of the country have seen some tightness in supply, we do not have any purchase limits on eggs.

When will costs decrease?
Egg prices may not drop immediately for consumers due to the approaching Easter holiday.

“Because of Easter and egg hunts, we typically see egg prices peak in the spring, particularly for table eggs. Egg prices and demand both rise as a result. That’s coming up quickly, so egg prices will probably stay high in the coming months,” Anderson stated.

However, Anderson is optimistic.

According to Anderson, “I do expect that increases in production will begin to catch up to and surpass the disease losses as we go further into 2023.” As a result, “production will expand,” “we’ll get back to the 327 million or so egg layers,” and “price will come down.”

“We expect a slight decline between now and Easter when prices will likely spike again,” stated Wells Fargo’s Bergquist. However, we do not anticipate a return to levels prior to the bird flu. If the outbreak goes away in the next six months, flocks of birds that lay eggs will slowly rebuild, which will increase egg supplies and help lower egg prices in the long run. Egg prices typically fall significantly during the summer compared to the holiday season, and this may continue in 2023.”

The USDA reports that inventory is rising and prices are beginning to fall.

“In the final week of 2022, inventory sizes began to increase and prices decreased. As the industry continues to rebuild its egg-laying flocks after the holiday season, wholesale prices are anticipated to decrease in the future.”

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By Saul Goodman

Hi, I Like, do Like to write articles about things that are happening around the world.

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