Grocery shoppers have been forced to scramble since egg prices have been consistently high.
With the cost of Grade A eggs hitting a record high of $5.90 per dozen in February, many consumers have had eggs on their faces. This was the highest price consumers had ever paid for eggs, nearly double what they had paid the previous year.
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Some relief may finally be on the way, as the wholesale egg prices have started to fall.
However, Easter and a lag between the changes in wholesale and consumer prices may mean that relief doesn’t come immediately for frustrated grocery shoppers, many of whom have struggled with high food inflation since the pandemic.
Here’s why egg prices are finally falling
Egg prices peaked due to a deadly outbreak of bird flu that spread across the United States, resulting in the death of millions of egg-laying chickens. Major producers may also have engaged in alleged anti-competitive behavior to drive prices up, prompting an antitrust investigation by the Department of Justice in March.
The good news is that outbreaks of bird flu appear to be becoming less frequent. Additionally, high prices have weakened consumer demand, with many people choosing to forgo purchasing eggs due to record costs. Some buyers, fearing further price increases from continued bird flu outbreaks, also stockpiled eggs, reducing future demand further. With higher supply and lower demand, prices have begun to drop.
“Slowing outbreaks are leading to improved supply availability and wholesale market prices have responded with sharp declines over the past week,” the USDA wrote.
The drop in wholesale egg prices has been significant, with the cost per dozen dropping 44% from its mid-February peak. Wholesale prices are now $4.83 per dozen instead of $8.58 per dozen, according to Expana, which tracks agricultural commodity prices.
Karyn Rispoli, an egg market analyst and managing editor at Expana, told CNBC via email that prices had plunged due to market dynamics placing "extreme pressure" on the cost per dozen.
The Trump Administration also initiated a plan to help lower prices, including investing $500 million in biosecurity improvements, providing more indemnity payments to farmers, reducing regulations and importing more eggs to increase supply.
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Consumers may not see lower prices just yet
While the reduced wholesale cost is good news, it doesn’t mean consumers will enjoy cheaper eggs just yet.
Rispoli explained that there’s typically a two to three-week lag between a change in wholesale prices and a decline in retail prices. Retailers also don’t always adjust their prices immediately to match wholesale fluctuations, meaning consumers may still feel the effects of peak prices when they shop for eggs.
Consumers have seen some relief. U.S. Secretary of Agriculture Brooke Rollins stated, "The average cost of a dozen eggs has now gone down $1.85 since we announced our plan."
However, this trend of reducing prices is not likely to last in the short term. Prices are expected to rise again with Easter, which traditionally increases demand for eggs. Easter season typically leads to increased egg demand for traditional activities like Easter egg dyeing, as well as hard-boiled eggs, which are a staple for many Easter meals.
Hopefully, once Easter comes to pass, the Trump Administration’s efforts and the declining number of bird flu outbreaks will lead to more lasting price reductions, allowing consumers to put eggs in their grocery baskets without fear of cracking their budgets.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
