Egg Prices: Easter Approaching
Judging by the March 13th U.S. inflation report, retail eggs still show the most dramatic price movements, which is a big puzzle for many poultry farmers, consumers and economists. Since the bird’s flu occurrences subsided over time, it could be logical to expect egg prices to not only stop climbing, but also reverse their upward trend. But, although the price hike somewhat lost momentum, it’s apparently far from over.
According to the report, retail egg prices in the U.S. fell by 7% in February. A dozen large Grade A eggs cost $4.21, on average, down from $4.82 in January, a record high. However, as CNBC suggests, they may stay elevated as Easter approaches due to generally strong demand.
Below is the breakdown of the unveiled by the federal data tracked by the Federal Reserve Bank of St. Louis, food itemized inflation in the U.S. as of now:
Wholesale egg prices, the ones grocery stores and other retailers pay to egg suppliers, bottomed down in end of January – beginning of February. However, retail egg prices are still up a stunning 55% YoY, according to the above-mentioned CPI data — showing the largest percentage increases of any consumer good or service. Large Grade A eggs cost $1.93 per dozen at the beginning of 2022, on average.
Overall inflationary pressure, which may reinforce as Fed needs to stop its jumbo rate hikes eyeing the banking crisis in the country, is also a big factor of keeping egg prices high. Additional bullish factors include higher corn and soybean prices, which make it more expensive to raise chickens, as well as labor and transportation costs, which are unique exactly for this type of consumer staple.
The average wholesale price of eggs is up 16% so far in March. Those prices typically take about a month to trace all the way down to grocery shelves, even though price spikes tend to be less violent.
Summary and forecast:
In general, food prices are likely to pick up their pace, as the Federal Reserve is apparently facing a growing headwind and criticism in its adherence to fighting inflation “at any cost”. But among all other food staple stories, these are exactly eggs that look poised to resume their upward trend first, since they already gained momentum, they are an essential, non-replaceable item on any household table, and, on top of that, they require special methods of handling and transportation.