An Egg, Cheese, and Bacon Update

Looking at the 1995 price of a breakfast sandwich, the BLS Inflation Calculator tells us it should cost $2.40 in 2025. But it does not.

Climbing beyond the three dollar range, NYC buyers say that with coffee and a tip, they spend between six and seven dollars. So, if inflation does not explain the change in price, we can ask what does.

Breakfast Combo

Bloomberg’s Odd Lots podcast tells us that eggs and coffee are the culprits. By contrast, although rising, the production costs of the bun, the bacon, and the cheese have been relatively stable.

Eggs

Because of Avian flu, retail egg prices are up although at the wholesale level they are down. With fewer egg laying chickens, supply is down by 30 million birds to 285 million. During March, though, far fewer birds were slaughtered and egg production began to rise–though not as fast as expected. Then, on the demand side, the price hikes might have taken consumers out of their inelastic range. Demonstrating elastic demand instead, price started to matter.

Consequently, we can expect this trajectory to reverse:

Bread

For the bun, we have to consider Russian and Ukraine wheat prices. After Russia’s invasion, wheat prices peaked at $7.50 a bushel. While now they have descended, still pesticides, labor, and equipment have cost more. Similarly, throughout the bread supply chain, ranging from tariffs to labor and packaging, prices are up.

Milk

Farmers like to say that we are eating our milk instead of drinking it as they experience less demand for milk and more interest in cheese. Called class three milk futures, the milk used for cheese is more popular. However, U.S. dairy farmers worry about losing markets from Mexico’s tariff retaliation.

Bacon

Diminshing supply, Bloomberg suggests that the immigrants in our meat processing factories might be afraid to show up at work. In addition, with Mexico a major pork buyer, they cite the unpredictable impact of tariffs.

Coffee

And finally, we can blame a drought in Brazil and tariffs for coffee price volatility.

Our Bottom Line: Supply and Demand

As economists, we can see that rather than inflation, supply and demand explain an uncertain price for our breakfast combo.

My sources and more: Thanks to my Odd Lots podcast for reminding me to return to our breakfast sandwich. From there, this AP article was helpful for the price of eggs. And finally, for more on coffee, we took a close look here.

Please note that our featured image is from Serious Eats/Amanda Suarez.