Why Breakfast Became More Expensive

Remember when eggs were $4.95 a dozen?

Now, it’s worse, and that was just 18 days ago.

Breakfast Prices

The price of breakfast is climbing faster than lunch and dinner:

Coffee

Yesterday, the NY Times sent a new warning about coffee prices. Blaming climate change, fertilizer, and more expensive labor, growers say costs are skyrocketing. However, with 60% of the world’s coffee grown on small farms, it’s tough for them to adjust to new cost pressures. Instead, the bigger businesses like J.M. Smucker. (Folgers) are the ones that benefit from higher prices.

Surpassing $7 a pound, coffee is touching new highs:

Orange Juice

Similar to coffee, climate is the big problem. Because pests, climate, and rising costs have diminished Florida’s orange crop, Brazil became the big producer. However, it too harvested less this year.

As a result, orange juice will cost us more:

Bacon

Bacon’s price also has trended skyward to the $7 range:

So yes, it all adds up to breakfast climbing faster than all other meals.

Our Bottom Line: Reference Points

Looking at sentiment about how prices have gone up, a behavioral economist might take us to a reference point. With gasoline, a previous week’s price of $4.00 a gallon makes us feel that $3.50 is a bargain. But if the price beforehand had been $3.00, then $3.50 looks astronomical. Similarly, if our stock portfolio plunges, we don’t feel so bad when the S&P declined even more. However, at work we will be unhappy with a 5% raise when an associate gets 7%.

Called an anchor by economics Nobel Laureate Daniel Kahneman (March 5, 1934-March 27, 2024), reference points can be invisible. Assume, for example, that after being told a jar has 500 jellybeans, we are asked to guess the number of candy bars in another container. Based on Dr. Kahneman’s experiments (described in Thinking Fast and Slow), people who are told the first jar has 200 beans instead of 500 answer the second question with a lower number. The reason? The first jar became an anchor that biased the second answer.

In yesterday’s Opinion email, Bloomberg used gasoline as the “anchor” that referenced the price of eggs:

Indeed, whether looking at eggs, coffee, orange juice, or bacon, the price of gasoline suggests how expensive breakfast has become.

My sources and more: Thanks to my Bloomberg Opinion email for inspiring today’s post. In addition, with the proliferation of articles about eggs and its breakfast friends, my inspiration could have come from here or here, and here, here, and here.

Please note that several of today’s sentences were in a past econlife post.