Opinion: Rising egg prices and the inflation impact

Richard Baker

"Oh no, not the eggs,” my wife exclaimed when the news showed a semitruck on our local interstate had crashed in the snowstorm and ruined all the eggs in its trailer. All consumer prices are pushing higher, but my clients mostly talk about egg prices. That is because egg prices are rising five times faster than everything else.

The latest inflation numbers showed inflation went up 3% in January from December. Egg prices increased over 15% from December to January, the largest increase in a decade, and shockingly, egg prices are up 53% over the last year. The bird flu is to blame.

The bird flu (avian influenza) outbreak is the major factor in rising food costs, especially regarding egg prices. According to the U.S. Agriculture Department, the bird flu outbreak is the deadliest in history and has killed more than 100 million U.S. chickens, turkeys and egg-laying hens since 2022. This is because once a single bird on a farm is identified with the disease, the whole flock must be killed to prevent further spread. Eliminating entire flocks is leading to significant supply shortages and higher prices in grocery stores.

According to the Labor Department, Americans are paying nearly $5 a dozen, a record high and more than double the price from a year ago. According to the Wall Street Journal, most supermarkets are paying close to $7 a dozen and taking the loss not to alienate customers.

The Egg Clearinghouse, which is the Wall Street of Eggs, is an online marketplace where large grocery store chains bid on truckloads of eggs at a time. They sold over 2.6 billion eggs last year and say the demand hasn’t slowed a bit with the high prices.

Most of the nearly 110 billion eggs laid by U.S. hens go to commercial customers and end up in places such as Walmart, Costco and restaurants like Waffle House. The Egg Clearinghouse reports that many of their customers are adding surcharges for egg dishes.

Egg and other food inflation will probably be a one-off event in terms of how it affects overall inflation. Egg prices will lower if the outbreaks are contained and after the normal high egg demand of Easter.

Inflation numbers are just part of the current investment puzzle. I expect the stock market to move higher in 2025, but we could see some short-term weakness. So, in the accounts I manage, I have increased my exposure to large-cap growth stocks, decreased my holdings in small-cap stocks, and added some alternative holdings for downside protection and to increase diversification. Historically, large-cap stocks tend to do well when the economy slows because of their stronger balance sheets and because they are less sensitive to interest rate fluctuations. There are still a lot of upsides, but I want to see if inflation re-accelerates before I move aggressively.

When our church’s Sunday School was cancelled last Sunday, I took our family to breakfast. We went to a local restaurant known for its giant pancakes and were surprised by the neon yellow sticker on the front of the menu saying there was a $1 upcharge for every plate served with eggs. It didn’t change what we ordered, but if this type of thing continued for a long time, it might. I like my eggs over easy with bacon, so I am praying egg prices will come down soon.

Richard Baker, an accredited investment fiduciary, is the founder and executive wealth adviser at Fervent Wealth Management LLC in Springfield. He can be reached at richard@ferventwm.com.