Egg Prices See First Decline in Months, But Future Remains Uncertain

After months of soaring prices, U.S. egg prices experienced a welcome dip in April, offering consumers a slight reprieve at the grocery store. However, the cost of a dozen Grade A eggs remains elevated at an average of $5.12, highlighting the ongoing impact of factors that have plagued the egg market.

The Labor Department’s consumer price index (CPI) revealed a 12.7% decrease in the overall cost of eggs last month. This marks the first month-to-month decline since October 2024, a period characterized by consistent price hikes driven by a persistent bird flu outbreak. The outbreak significantly affected American poultry farms and egg-laying hens, leading to a reduced supply and subsequently, higher prices for consumers.

The average price for a dozen Grade A eggs reached a record high of $6.23 in March, making the recent drop a significant development, according to Bernt Nelson, an economist at the American Farm Bureau Federation. "Considering that we were at record level prices just a couple of months ago, I think this is a pretty big move," Nelson stated, adding a note of caution: "We can’t say that it’ll necessarily stay this way, but for the near term, this is great."

Nelson attributes much of the price decrease to the collaborative efforts between farmers and the U.S. Department of Agriculture (USDA) in implementing biosecurity measures. These measures are designed to prevent the spread of bird flu on farms, thereby protecting the egg-laying hen population and stabilizing egg production.

Eylem Senyuz, a senior investment strategy analyst at Truist, identified additional factors contributing to the price decline. One key factor is the increase in egg imports by U.S. sellers. By sourcing eggs from other countries, U.S. suppliers are able to supplement domestic production and alleviate some of the supply constraints that have driven up prices.

Furthermore, declining costs for essential resources like energy and feed needed to heat and care for chickens have also played a role in the price decrease. Lower input costs translate to lower production expenses for farmers, which can then be passed on to consumers in the form of lower egg prices.

Consumer behavior also influences egg prices. As Senyuz pointed out, a significant price increase can lead consumers to reduce or eliminate egg purchases. "If a dozen eggs costs $6 and you’re used to paying $2, you may stop buying eggs all together, resulting in less demand and eventually lower prices," he explained.

The White House acknowledged the decline in egg prices, with spokesperson Kush Desai celebrating the news in a statement. Desai also highlighted other positive aspects of the CPI report, such as cooling inflation and rising real wages.

However, the critical question remains: are these lower egg prices temporary or are they here to stay? The answer is far from certain, as several factors could influence the future trajectory of egg prices.

In April, the USDA still anticipated a significant rise in egg prices this year, predicting an increase as high as 54.6% in 2025. Nelson noted that the USDA’s prediction is partially based on the assumption that farmers will continue to grapple with bird flu outbreaks.

However, Nelson offered a more optimistic perspective, stating, "If things stay calm like they are now, we have a relatively low case load and that stronger biosecurity does its job and starts showing some success, we might see egg prices stay down."

Multiple other factors will also play a role in determining egg prices in the coming months. These include the rate of egg production, the ongoing effectiveness of biosecurity measures, and even geopolitical events. Senyuz suggested that a peace deal between Russia and Ukraine, two of the world’s major grain producers, could lower the cost of chicken feed and ultimately impact egg prices for U.S. consumers. "By just looking at input prices, energy and agriculture, and the import process that has started, if I had to guess what the next month’s number should be, it should be lower rather than higher," Senyuz said.

Ellen Kan, a partner at Simon-Kucher, emphasized the uncertainty surrounding future egg prices. While efforts have been made to rebuild domestic egg supply, the sizes of egg-laying flocks remain significantly smaller than they were before the bird flu outbreaks. She also cautioned that the supply chain is not "meaningfully protected" in any way different from six months ago, making it vulnerable to future disruptions. "We are still subject to any sort of volatility or major shocks to the supply system if there is another big outbreak," Kan said. "So, I’m not sure the solve is sustainable. We could get lucky and it could stick, but who knows?"

Kan also pointed to the potential impact of changing tariff policies. High tariffs on eggs or anything that affects their production would likely lead to cost increases, according to both Senyuz and Kan.

In addition to egg prices, the CPI report also revealed trends in other grocery categories. Grocery prices overall dropped 0.4% in April, nearly offsetting a 0.5% rise the month prior. Other breakfast essentials also experienced price declines, with the price of cereal falling 2.5% and the cost of bacon declining 1%.

However, not all food staples saw price decreases. Bread prices rose 1.6%, and fresh fish and seafood increased 0.8%.

While the cost of groceries, on average, declined, the report also indicated that the price of dining out became more expensive, rising about 4% from the past year. The price of food away from home rose 0.4% in April, marking the third consecutive monthly increase.

In conclusion, the recent decline in egg prices offers a glimmer of hope for consumers facing high food costs. However, the future of egg prices remains uncertain, with multiple factors potentially influencing their trajectory. The ongoing threat of bird flu outbreaks, the effectiveness of biosecurity measures, geopolitical events, and changing tariff policies all contribute to the volatility of the egg market.