What Does it Take to Make Breakfast? US Egg Prices Soar 36%
Egg prices in the US have surged by more than 36% due to supply shortages caused by avian flu.
They're not alone in this sudden jump in value as energy and food prices in the US jumped last month, exposing ongoing challenges in stabilising costs.
Inflation rose to 2.9% in December compared with the previous year, up from 2.7% in November, according to the Labor Department. Energy prices drove more than 40% of the increase, while egg prices surged more than 36% due to supply shortages caused by avian flu.
While some prices climbed, others rose less than expected, easing concerns that the US Federal Reserve might have to take more aggressive measures.
However, the broader issue remains: supply chains are under strain and disruptions continue to ripple through the economy.
The latest inflation data reflects the ongoing impact of supply chain instability, particularly in agriculture and energy markets. Avian flu has significantly disrupted egg production, forcing farms to cull millions of birds, reducing supply and pushing prices higher.
The outbreak, which has affected more than 130 million birds since it began, is the worst in US history.
In late 2024, East Coast farms saw another surge in cases, leading to the culling of 20 million chickens—about 6.5% of the country’s egg-laying hens. This led to an 8.4% rise in egg prices in December alone, contributing to a 36.8% year-over-year increase.
The US Department of Agriculture predicts further price rises in 2025, with costs expected to jump another 20.3% by the year’s end.
Keith Cooper, Head of the Food, Agriculture & Beverage at FTI Consulting, summarises why egg prices are so significant in economic discussions: "They're a fundamental staple."
Eggs are a key part of many households' budgets, making price increases particularly noticeable for consumers.
The egg industry’s structure makes it highly vulnerable to supply shocks. Around two-thirds of US egg-laying hens are kept in battery cages with less than 70 inches of space per bird. These cages are packed into large barns, creating ideal conditions for disease to spread rapidly.
Even among the 28% of hens raised cage-free, birds still spend much of their time indoors in close proximity, making outbreaks difficult to contain.
When avian flu is detected on a farm, the entire flock must be culled and the site undergoes sterilisation. Although farms can breed new chickens relatively quickly, taking around six months from egg to maturity, there is no way to accelerate the process or guarantee that future flocks won’t also be affected.
Economic impacts and market reactions
Inflation has fallen significantly since its peak of over 9% in 2022, but fluctuations in key sectors continue to create uncertainty.
Last month’s report showed rising costs for used cars, airline fares, medical care, and car insurance. Grocery prices climbed 0.3% from November and were up 1.8% compared with the previous year.
Rents, which have been a major contributor to inflation, increased 0.3% month-on-month and 4.6% from December 2023. Fuel prices also rose 4.4% from November, though they remained lower than the previous year.
Despite these cost increases, core inflation, which excludes volatile food and energy prices, rose just 3.2% year-on-year and 0.2% from November—less than analysts had expected. This eased fears that inflation could spiral again.
Market reaction reflected this cautious optimism. Share prices in the US rose and bond yields fell in early trading, indicating relief that the Federal Reserve may not need to tighten monetary policy further.
However, future policy decisions remain uncertain. The Federal Reserve, which had raised interest rates to their highest levels in more than 20 years to control inflation, is widely expected to keep rates unchanged this month.
While investors initially anticipated rate cuts in 2024, stronger-than-expected job creation in December has led to doubts over how much rates might fall in the coming months.
However, future policy decisions remain uncertain. The Federal Reserve, which had raised interest rates to their highest levels in more than 20 years to control inflation, is widely expected to keep rates unchanged this month.
While investors initially anticipated rate cuts in 2024, stronger-than-expected job creation in December has led to doubts over how much rates might fall in the coming months.
The need for resilient supply chains
The ongoing challenges in the US food sector highlight the complex links between agriculture, supply chains and economic stability.
Sharmah Seakar, Senior Procurement Lead at Efficio, emphasises the need for long-term solutions: "The ongoing egg price crisis in the US highlights the interconnected nature of agriculture, economics and public health.
"Key factors include the 2022-2023 Highly Pathogenic Avian Influenza (HPAI) outbreak, which led to the culling of more than 58 million birds and reduced egg production by 5-7%, creating a supply-demand imbalance.
"Rising feed costs, driven by global commodity price increases and labour shortages further escalated production expenses. As a result, US egg prices soared to record highs, exceeding US$4.25 per dozen in late 2022—an increase of 137% from the previous year."
Sharmah outlines the timeline of egg prices below:
July 2024: The average price for a dozen Grade A, Large eggs was approximately US$2.40.
August 2024: Prices rose to about US$3.21 per dozen, reflecting a 33.8% increase from July.
September 2024: Prices averaged US$3.06 per dozen.
October 2024: Egg prices averaged US$3.37 per dozen, a 10.1% increase from September.
November 2024: Prices further escalated to US$3.65 per dozen, an 8.3% rise from October.
December 2024: The average price peaked at US$4.15 per dozen, marking a 13.7% increase from November.
He adds that US egg production totalled 8.92 billion in September 2024, a 2% decrease from the same period in 2023, while the USDA has adjusted its egg production forecasts downward for 2025, citing a smaller laying flock and lower lay rates. This means that experts predict egg prices could rise by an additional 20% by the end of 2025, potentially reaching nearly US$5 per dozen.
"To build resilience, stakeholders must focus on strengthening biosecurity, exploring alternatives like egg substitutes and adopting sustainable practices," he continues.
"Collaborative efforts across the supply chain will be crucial in addressing future challenges and ensuring food security in the US."
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