How Egg Prices Reveal the Mysteries of Inflation

With inflation way down, we can wonder why egg prices were up 28.1% during the 12 months preceding this August.

According to the CPI, recent food prices have minimally moved:

Egg

Not nearly at their January 2023 spike to $4.82 a dozen, still, you can see recent egg prices have been trending upward to $3.20 in August. Again the reason is bird flu:

And again, we can look to supply and demand. With the number of egg laying birds descending, shrinking supply nudged prices skyward. In Colorado, one egg-laying operation reported having “culled” 6 million birds with plans to kill another 1.8 million.

Statisticians tell us that year-over-year July egg production was down 2.6%. As economists, we know that when we shift our supply curve, price rises:

Meanwhile, in our backyards, more of us have rented chickens. While the trend started during Covid, the numbers are soaring. With a $795 package from Rent-the-Chicken available in New Jersey (and I assume elsewhere), you get two egg-laying hens, the coop, water dishes, the food, and instructions. You also wind up with 8-14 eggs a week.

In addition, studies indicate that we wind up with a paradox. The chickens become our pets that we would not eat. But still, we roast the chickens we buy from the supermarket.

Our Bottom Line: Understanding Inflation

During August 2023, a dozen eggs cost us close to $2.04. And, only three years before that, many of us remember paying $1.35. However, rather than inflation, one primary reason for egg price spikes has been bird flu.

Perfectly illustrated by egg prices, we might blame what we call inflation when there is another reason.  For eggs, it is a disease that easily spreads among chicken populations. With other goods, we know that when Covid distorted supply chains, prices increased. Only now have we returned to normal.

My sources and more: Thanks to Cary for alerting me to the CNN article on egg prices. From there, we found specific poultry numbers here and here. Then, I returned to our new connection to our chickens and these backyard chicken statistics.