Although inflation in the United States slowed to 2.9% in July, reaching its lowest level in three years, there are some not-so-good news as well. The continuously rising prices of eggs have once again made this staple food a focal point of attention in America.
According to the latest data from the Bureau of Labor Statistics (BLS), grocery prices in July rose by 1.1% compared to the same period last year, and increased by 0.3% compared to June. The price of eggs rose by 19.1% year-on-year and by 5.7% month-on-month, resulting in a sustained high level of food prices.
The year-on-year increase in egg prices in July was the highest since April 2023, when egg prices rose by 21.4% compared to the previous year. The average price of a dozen Grade A large eggs increased from $2.72 in June to $3.08 in July. At the beginning of 2024, a dozen eggs were priced at $2.52.
July also marked the third consecutive month of year-on-year egg price increases, reversing the trend of relative decline seen over the past year.
As eggs are ubiquitous in daily cooking, the rising price of eggs during the pandemic has become a concern for consumers. The increase in egg and other grocery prices has always been a major issue of the high cost of living that consumers have to face, which in turn has undermined consumer confidence in recent years.
Tom Flocco, CEO of premium egg producer Pete and Gerry’s, told Yahoo Finance that prices are affected by supply and demand dynamics, such as the outbreak of avian flu leading to tight supplies. He noted that the situation is different for high-end eggs as the laying hens for these eggs are free-range.
He added that the biggest input cost is grains, including corn, soybeans, and nutrients, which may account for more than 50% of the price of a dozen eggs. Other factors include contracts with farmers, transportation, and labor costs, with labor costs having been rising over the past 18-24 months.
Economist Steve Reed from BLS told Yahoo Finance that the situation of household food costs is generally “a mixed bag” as they have been fluctuating.
Caitlinn Hubbell, a market research analyst at Purdue University’s Center for Food Demand Analysis and Sustainability in West Lafayette, Indiana, told CNBC that they believe the rise in egg prices is related to avian flu. She mentioned that unfortunately, highly pathogenic avian flu is still ongoing.
The avian flu epidemic had a historic outbreak in 2022, and saw another surge at the end of 2023. Hubbell stated that recently, the resurgence of the epidemic in Colorado and California has damaged egg supplies.
Hubbell added that egg demand is “inelastic,” meaning that regardless of price increases, consumers typically purchase the same quantity of eggs. On the other hand, she pointed out that consumers generally do not stockpile eggs when prices fall.
She explained that even minor changes in supply often lead to significant price fluctuations for inflexible goods.
Looking ahead, Hubbell stated that the trend in egg prices will depend on the situation of avian flu.
“It’s hard to say,” Hubbell said. “It all depends on the scale and scope of highly pathogenic avian flu.”
In addition to eggs, in July, the annual increase in bacon prices was the largest since July 2022, rising by 8.5%, while the increase in frozen non-carbonated juice and beverage prices was 19.2%.
On the other hand, fresh fish and seafood prices saw the largest monthly decline ever, dropping by 2.4%. They fell by 2.1% compared to the previous year.