What’s everybody getting so eggcited about?
Okay, sure, egg prices have soared, generating tons of news stories about the coming eggpocalypse, plus an eggzhausting parade of bad egg puns. As you’ve probably heard, eggs cost 60% more than they did a year ago, causing cake and omelet outrages nationwide. Consumer groups are demanding investigations into price gouging. More Americans want to circumvent Big Egg by raising their own chickens.
But hold on a minute. Though a tasty staple, eggs represent a tiny portion of all food spending, at both the household and the national level. As with other types of inflation, this too shall pass. Eggzagerated inflation coverage, meanwhile, bums out consumers and obscures a generally positive trend in price levels and improving purchasing power.
Here are the numbers. The average American consumes about 278 eggs per year. The average cost of a dozen eggs in 2022 was $2.86. Call that 24 cents per egg. Multiply that by 278 eggs per year and you get about $67 in spending on eggs per person each year. There are 2.6 people in the average household, so total eggzpenditures are about $173 per year, per household.
Food accounts for 12.4% of the typical household budget, or about $8,300 per year. At $173 per year, eggs represent just 2% of all food spending. Total household spending is about $67,000 per year, so eggs represent just .03% of all consumer outlays. It’s not nothing, but it’s not much, either.
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These are rough estimates that conflate wholesale and retail prices, along with eggs consumed at home and those ordered at restaurants. But top-down estimates show the same vanishing impact of higher egg prices on consumer budgets. U.S. egg sales generate about $13 billion in annual revenue. Total food spending is around $2.1 trillion. That would peg eggs at 0.6% of all food spending, and food spending, again, is about one-eight of all consumer spending. Not eggzactly ruinous.
Gasoline, by comparison, accounts for about 3% of household spending, which is a lot more than egg outlays. And economists think gasoline has an outsized impact on consumer psyches, given that confidence levels seem to rise and fall in fairly direct correlation with the gas prices drivers see advertised on the billboards at every filling station in the country. Americans spend a lot more on housing and health care, but those costs aren’t as visible and seem to affect confidence less.
This eggzamination of egg prices is not meant to dismiss the scourge of food inflation, which has improved slightly in recent months, but at 11.8% is still way too high. Several factors are causing overall food inflation, including the high costs of diesel fuel needed to cultivate and transport food, and high fertilizer prices related to the Russian invasion of Ukraine, a region that exports important fertilizer components.
There’s a different eggzlpanation for egg inflation. The worst avian flu outbreak in US history has killed millions of chickens and caused a shortage of eggs. It’s possible some suppliers are trying to keep prices artificially high for as long as they can, but no single egg supplier dominates the market and even if one did, demand shifts away from costly products toward less expensive ones normally helps lower prices.
We’ve now endured about 18 months of abnormally high inflation that has startled consumers, but also shown that what goes up usually comes down. The price of cars soared during the Covid pandemic, mainly due to a semiconductor shortage and other supply-chain snags. But new car prices have moderated recently, and used car prices are actually falling. Gasoline prices were up 60% last summer but are now lower on a year-over-year basis. Rent and other housing costs seem likely to dip in 2023 as rising interest rates dent real-estate values.
Before long, the eggsplosion in egg prices will subside, too.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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