Egg prices surged in February but there are signs of relief

By Ilena Peng and Michael Hirtzer

U.S. egg prices once again surged in February’s closely watched inflation report amid a shortage caused by bird flu, but there are signs that dropping demand is bringing some relief.

Egg prices jumped 10.4% on a seasonally-adjusted basis in February from the previous month, bucking an overall trend of slowing food inflation, according to a U.S. Bureau of Labor Statistics report Wednesday. However, prices have declined steeply in recent weeks as weakening demand gives supplies a chance to catch up, according to the U.S. Department of Agriculture.

“We’re actually seeing prices erode very rapidly,” said Brian Moscogiuri, a vice president at supplier Eggs Unlimited. “We’re seeing the consumers start to push back on some of those higher prices that they’re seeing. It seems demand has fallen off sharply.”

Eggs nationally cost $6.85 a dozen as of March 7, down 16% from a record $8.15 two weeks earlier, according to the USDA.

An ongoing outbreak of the bird flu has tightened supplies, leading to record prices. Consumers were recently faced with empty grocery shelves and signs limiting their purchases, as tens of millions of chickens have been killed across the country to control the spread of bird flu. 

That has posed a prominent issue for the Trump administration, which has promised to bring down food inflation and recently announced a five-part plan to help combat the avian influenza, including boosting egg imports.

“It’s something that’s in everybody’s grocery cart for the week, and when they see something doubling like that, they’re just kind of wondering where the next hit is,” said Amy Smith, vice president of supply chain consultancy Advanced Economic Solutions Inc. “It puts a psychological burden on consumers.”

The hit to consumer demand as prices reached records — and as there have been no significant outbreaks of bird flu in recent weeks — has provided an opportunity for production to make progress in reducing egg shortages, the USDA said in its report.

Retailers are also curbing advertising, and promotions have been “nearly non-existent” as grocery retailers don’t want to jeopardize the progress they’ve made in restocking coolers by encouraging egg buying, the USDA said.

Still, demand is expected to pick up as Easter, a major buying holiday, approaches on April 20.

Easter purchasing may have been weaker if prices remained high, but with the recent pullback consumers may see some of the cheapest prices in months, Moscogiuri said. “We could have a decent demand recovery.”