Breezy Explainer: While inflation has eased, why are eggs still so expensive in the US?

Breezy Explainer: While inflation has eased, why are eggs still so expensive in the US?

Prices of eggs have been stable for the past 40 years as supply and demand have been in sync, but prices of eggs across the United States are currently skyrocketing. In a year when Americans’ shopping expenses ballooned overall, the price of eggs rose particularly sharply.

According to the consumer price index, average egg prices increased 49.1% year on year in November 2022, the greatest yearly percentage increase among all supermarket goods during that period. According to government sources, the price of Grade A eggs increased considerably more over this time period, rising from $ 1.72 to $ 3.59 (more than double) for a dozen.

In comparison, according to the US Bureau of Labor Statistics, overall “food inflation” in December 2022 was 10.4 percent.

The surge in egg costs was a stumbling block for consumers across the country, particularly during the holiday season, when many popular recipes called for eggs as a fundamental basic component.

Avian flu is affecting the supply

The country’s brush with several outbreaks of deadly avian flu has been a significant driver of rising egg prices in the United States over the last year. According to a CDC report revised on January 11, roughly 58 million birds are expected to be impacted by the Highly pathogenic avian influenza (HPAI) A(H5) viruses beginning in January 2022, with 729 documented occurrences. The year 2022 saw the deadliest avian flu outbreak in US history.

Avian flu has had such a large impact because it is both fatal (killing 90-100 percent of infected birds) and highly spread. Farmers must kill their remaining stocks if the flu is identified on their farm, according to federal guidelines in the United States.

According to the Associated Press, approximately 58 million egg-laying hens, poultry chicks, and turkeys died as a result of avian flu or in subsequent cullings, with more than 43 million being egg-laying hens. This has had a significant impact on the country’s egg output. According to US Department of Agriculture data from December 20, 2022, egg production went down to 8.87 billion eggs in November 2022 from more than 9.3 billion eggs the previous year – a nearly 5% reduction.

Clashing with peak demand

While this may not appear to be a major issue, the timing of the flu outbreaks in 2022 has been particularly devastating. Surprisingly reemerging in September 2022 – it usually comes in the spring and fades away by summer – the autumn outbreaks coincided with growing seasonal demand.

In the United States, the holiday season leads to a large increase in egg consumption. Because eggs are utilized in a variety of baking recipes as well as a cheap source of protein throughout the winter months, a supply disruption at this critical time of year was doubly detrimental.

There have been numerous reports of eateries and bakeries raising their prices dramatically to cover soaring egg costs over the holiday season.

Input expenses are rising

Not only did 2022 see record avian flu epidemics, but it also saw widespread inflation. This, together with growing input costs, had contributed to rising egg prices. According to several analysts, increased input costs, rather than avian flu, were the primary drivers behind skyrocketing egg prices.

“When you’re looking at fuel costs go up, and you’re looking at feed costs go up as much as 60%, labor costs, packaging costs — all of that … those are much much bigger factors than bird flu for sure,” Emily Metz, president, and CEO of the American Egg Board trade group, told AP.

Supply chain snarls, higher manufactured goods costs due to part shortages, and rising global oil prices as a result of the Ukraine-Russia conflict have all contributed to 6.5 percent overall inflation in 2022, according to data from the US Bureau of Labor Statistics. In this inflationary environment, avian flu outbreaks simply exacerbated already steep hikes.

In other regions, such as California, egg prices can reach $7 for a dozen, owing to a state rule that forces egg producers to rear cage-free chickens, which went into effect last year, according to Forbes. While deemed more compassionate than typical caged egg-laying hens, farmers’ expenditures are increased because more space is required to house the same number of hens.

Increasing demand for eggs

Despite rising prices, demand for eggs has remained consistent. According to a USDA analysis, consumption has increased by 17 percent between 2012 and 2021, outpacing red meat consumption. One probable explanation for this is a greater emphasis on personal health and diet. Eggs, which are considered a healthier protein alternative to red meat, have dominated the diets of people looking to increase muscle mass.

Notably, despite rising prices, eggs are still considered low-cost protein sources. According to the US Bureau of Labor Statistics, a pound of chicken breasts cost $4.42 on average in November, and a pound of ground beef cost $4.85. As a result, despite the excessive price increase, egg demand has remained rather stable. This merely adds to the skyrocketing egg prices.

When can I expect a break?

According to Jada Thomson, an agricultural economist at the University of Arkansas, there may be some relief in egg prices in the coming months because egg farmers have been progressively rebuilding flocks lost to avian flu last year and demand will reduce now that people have finished their holiday baking.

Overall, inflation in the United States has slowed dramatically in the last month of 2022 and early 2023, potentially signaling lower egg costs in the future. However, because supplies are still not at pre-avian flu levels, eggs remain an expensive buy in the United States.

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