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Egg prices rise nearly 60% as some retail locations have low supply

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The cost of eggs stood out in Thursday’s CPI report – rising 59.9% year-on-year and 11.1% month-on-month from November to December.

That marked the biggest monthly increase since April 2020 and the biggest annual jump since September 1973, according to Steve Reed, an economist at the Bureau of Labor Statistics (BLS).

Eggs, he said, alone drove up the cost of groceries in December, which rose 0.2% month-on-month. “If you sort of removed eggs, if you removed eggs from [the ‘food at home’ category], would have been practically flat. Eggs accounted for more than 90% of that increase,” he said. In December, the cost of large Grade A eggs per dozen was $4.25.

What’s behind the price increase? The avian flu outbreak.

“Total US laying flock size decreased by about 10% as an estimated 40 million laying hens contracted the disease and were subsequently wiped out in 2022,” Wells Fargo analyst Kevin Bergquist told Yahoo Finance.

As a result, total egg production dropped by around 5%.

David Anderson, a professor in the Department of Agricultural Economics at Texas A&M, said the production costs also drove record prices.

“Feed costs have been much higher for a few years now. As feed prices have gone up, profits have gone down, and the economic response to that is to produce less, so we produced a little less laying hens anyway, before [avian flu] hit,” he said.

Anderson added: “A small change in supply or quantity produced generates a much larger increase in price. That is, if the price goes up, the consumer will buy eggs anyway, or they won’t cut much. There really isn’t a substitute for an egg in my Egg McMuffin, or my omelette. You practically have to eat eggs.

In addition, holiday baking has led to an increase in demand, he said.

Impact on retailers?

As a result of supply issues, some retailers are limiting customers’ egg purchases.

On November 29th, Yahoo Finance saw this sign on BJ’s Wholesale Club limiting 2 cartons of eggs per customer. BJ’s did not respond to a request for comment.

Whole Foods in Brooklyn recently imposed a similar limit.

Taken at BJ's Wholesale Club in New York City on November 29, 2022 (Courtesy of Yahoo Finance).

Taken at BJ’s Wholesale Club in New York City on November 29, 2022 (Courtesy of Yahoo Finance).

Other major retailers are pushing back limits.

A Target (TGT) spokesperson told Yahoo Finance: “While we are experiencing low inventory on some eggs, it depends on the brand. We are not limiting guest purchases at this time.”

The current average selling price for Target 12 private label Good & Gather conventional eggs is $4.26, one cent more than the current national average for US cities.

A Walmart spokesperson told Yahoo Finance: “While we have some regions of the country that have experienced some supply tightness, we are seeing an improvement in egg supply at the moment and are recovering from a challenging holiday season that has seen demand and impacts greatly. high due to avian flu… We have no egg purchase limits.”

When will prices go down?

With the Easter holiday coming up, it may be a while before consumers see relief in egg prices.

“Usually we see the peak in egg prices in the spring, especially table eggs because of Easter and the Easter egg hunt. That increases demand and egg prices. That’s coming up soon, so the Demand will likely keep egg prices high for the next few months,” Anderson said.

Anderson is optimistic, however.

“Hopefully, as we move into 2023, increases in production will start to catch up with and outpace disease losses, so as production expands, we’ll get back to 327 million or more layers and prices will come down.” Anderson said.

Wells Fargo’s Bergquist was also confident, saying: “We expect a slight decline between now and Easter, when prices are likely to pick up again. However, we don’t anticipate a pullback back to pre-bird flu levels. dissipate Over the next six months, laying hens will slowly recover, increasing egg supplies and helping to alleviate long-term high egg prices. Summer egg prices are generally much lower than the holiday season , and it could happen again in 2023.

And according to the USDA, inventory is rising and prices are starting to drop.

“During the last week of 2022, stock sizes started to increase and prices dropped.

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @Brooke Di Palma or email her at bdipalma@yahoofinance.com.

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