Egg Prices Soar Despite Easing Inflation, Fueling Consumer Grocery Concerns

Egg prices continued their upward trajectory in February, defying the broader trend of easing inflation, according to the latest Consumer Price Index (CPI) data released this week. This persistent increase in egg costs is adding to consumer anxieties about grocery prices, which remain a top concern despite some moderation in overall food inflation.

While the rate of increase in grocery prices has slowed compared to the pandemic-induced surge, recent acceleration is evident, driven in part by factors like drought, hurricanes, and the ongoing bird flu outbreak. This avian influenza epidemic, now in its second year, has significantly impacted poultry populations and egg production, contributing to the price hikes.

The CPI data reveals that egg costs surged by another 10.4% in February, following a substantial 15.2% increase in January, both figures seasonally adjusted. The U.S. Bureau of Labor Statistics (BLS) reported that the average price of a dozen large grade A eggs in U.S. cities, unadjusted for seasonal variations, reached $5.90 in February. This represents a significant jump from $4.95 in January and $4.14 in December, highlighting the rapid escalation of egg prices in recent months.

Consumer anxieties surrounding grocery prices are substantiated by a recent survey conducted by Morning Consult. The survey indicates that nearly 90% of consumers are "very concerned" (61%) or "somewhat concerned" (29%) about the cost of groceries and food. This high level of concern underscores the significant impact that rising grocery prices have on household budgets and consumer sentiment.

The Morning Consult survey reveals a disconnect between the overall inflation rate for groceries and consumer perception. While the annual inflation rate for groceries is relatively low at 1.8% compared to its peak of 13.5% in 2022, grocery prices remain the top concern for consumers. This suggests that even a modest increase in grocery costs can have a disproportionate impact on consumer sentiment, particularly when certain staples like eggs experience dramatic price increases. Other concerns listed in the survey were general inflation, housing costs, gas costs, and covering monthly expenses.

Interestingly, the survey also found that 61% of respondents would prefer a decrease in the prices of goods and services over an increase in their income (39%). Although this preference has slightly decreased since 2023, it still indicates a strong consumer desire for price declines, highlighting the perceived burden of rising costs on household budgets.

Despite the headlines dominated by skyrocketing egg prices, overall food prices have remained relatively stable, with some categories experiencing declines. Andy Harig, vice president of tax, trade, sustainability, and policy development for FMI – The Food Industry Association, noted that fruits, vegetables, and bakery products saw price decreases in January. He emphasized that overall inflation has remained relatively flat but is being driven upward by outliers such as eggs, sugar, sweets, and certain beef products, which continue to experience above-average inflation rates.

FMI’s March shopper snapshot revealed a mixed bag of consumer sentiment, with both optimism and anxiety present. The percentage of shoppers with positive expectations for 2025 declined from 56% in January to 45% in March. The top concerns among shoppers were the potential impact of tariffs on grocery prices and the ongoing bird flu outbreak affecting egg prices and availability.

The article raises the question: "Are eggs the new toilet paper?" alluding to the stockpiling behavior observed during the early stages of the pandemic. While there is no concrete evidence of widespread egg hoarding, consumers are adapting to the shortages and high prices in various ways.

Consumers are demonstrating flexibility in their purchasing habits. They are switching to different brands, opting for less expensive types of eggs (e.g., moving from cage-free to conventional eggs), shopping at different stores, substituting eggs with other products, or simply buying fewer eggs and finding alternative meal options for their families. In some cases, consumers are even considering unconventional solutions, such as renting egg-laying hens or raising their own chickens.

Data from the Bank of America Institute Consumer Checkpoint study, which utilizes internal credit card data, suggests that rising grocery prices are influencing household spending patterns. Lower-income households initially increased their grocery spending by around 1% in January, while middle- and higher-income households experienced smaller increases. However, in February, lower-income households saw a decline in grocery spending, while middle- and higher-income households spent more.

The report suggests that this decline in grocery spending among lower-income households may be attributed to a "spreading out or trading down effect," as these households increasingly turn to general merchandise or discount stores to save money. This shift in shopping behavior reflects the efforts of lower-income consumers to mitigate the impact of rising grocery prices on their budgets.

The report also suggests that if food prices continue to rise, consumers may shop for groceries more frequently but spend less per trip. This approach allows them to focus on buying items that represent good value at specific stores. Furthermore, the report notes an increase in shopping at value grocery stores and a decrease in shopping at premium grocers. Grocery store spending per household at value stores rose 1.2% year-over-year, while spending at premium grocers dropped 1.4% during the same period. These trends indicate a growing consumer preference for value and affordability in the face of rising grocery prices.

In conclusion, the continued rise in egg prices, despite broader easing of inflation, is exacerbating consumer anxieties about grocery costs. Consumers are responding to these challenges by adapting their shopping habits, seeking out value, and exploring alternative solutions to mitigate the impact of rising food prices on their household budgets. The situation highlights the complex interplay between macroeconomic factors, supply chain disruptions, and consumer behavior in shaping the landscape of food prices and consumer sentiment.