Why Egg Prices Won’t Drop Back to Pre-2022 Levels

Eggs are seen at a grocery store in Washington, D.C., on Jan. 19, 2023. Stefani Reynolds/AFP via Getty Images

News Analysis

If there’s a poster child for 2022’s historic inflation, it ought to be an egg. This valuable source of nutrients has never been pricier.

In December 2022, a dozen eggs cost $4.25 on average, up from less than $1.80 a year prior, according to the Bureau of Labor Statistics.

The good news is, the prices are expected to drop. The bad news is, they’re unlikely to drop back to pre-2022 levels.

There are several reasons why.

Bird Flu

The year 2022 was marked by outbreaks of avian influenza that prompted a mass culling of poultry, especially in March and April when farmers had to cull more than 27 million egg-laying hens. With further losses over the September–December period, the avian flu cost egg farmers more than 43 million birds last year—more than 13 percent of the country’s egg-laying flock.

The current H5N1 bird flu strain, Gs/GD highly pathogenic avian influenza (HPAI) or Goose/Guangdong HPAI, appears to be particularly virulent. Avian flu is spread by wild birds, especially water birds, but usually doesn’t kill the carriers. This strain, however, has been reported as killing an unusual number of wild birds and even infecting mammals, leading to some concerns that it may infect humans.

Farmers have responded to the virus by trying to increase biosecurity in their operations. They also immediately started to raise more chickens to replenish their flocks, but the process is expensive because they have to house and feed the young chicks for four to five months before they start to lay eggs.

Coinciding with the outbreaks, from March to May, eggs went up in price to $2.80 per dozen from about $2 per dozen and then from September to December to $4.20 per dozen from about $2.90 per dozen.

Contrary to some reporting, there was never a national shortage of eggs. While the culling caused some supply disruptions, overall, there were plenty of eggs available. The industry started the year with a particularly high stockpile of more than 600 million eggs. Throughout the year, it has never once dropped below 400 million—several days’ worth of national egg consumption, according to weekly data collected by the Department of Agriculture (USDA).

Farmers have also managed to increase the number of eggs they get from each hen by about 2 percent and finished the year having produced almost 93 billion eggs, only about 3 percent down from the year before, according to USDA (pdf).

Supplies were further supported by a 40 percent drop in egg exports and a 30 percent hike in imports.

Over the past few weeks, stockpiles have started to grow again, signaling that prices should drop. However, prices may remain elevated.

Inflation

There are some indices that eggs won’t return to the prices they were a year ago. 2022’s historic inflation, which has since eased to 6.5 percent after having reached 9 percent in June 2022, means that farmers need to pay more for everything, from chicken feed to electricity and fuel. Those prices may come down, especially if the economy sinks into a recession, but it isn’t clear when and by how much.

Fuel prices have dropped in recent months due to the Chinese economy being decimated first by its draconian “zero-COVID” lockdowns and then by the disease itself. Diesel, however, has remained stubbornly expensive—up about 25 percent from a year ago.

On the other hand, egg producers have been able to drastically raise prices with apparently minimal punishment by the market—Americans have largely been willing to pay. Even as egg prices rose by 120 percent in 2022, December-to-December, Americans finished the year by eating about 277 eggs each on average, only about three eggs less than in 2021.

A part of the reason is that other food prices have also inflated, leaving consumers with few options.

“While the table-egg production was affected by repeated cases of HPAI, the demand for eggs remained strong throughout the year, adding additional pressure to prices,“ the USDA stated in a January industry report. ”This is partially because eggs are a staple product with few substitutes. Moreover, for much of the year, they represented the lowest cost protein alternative.”

During the COVID-19 pandemic, the government pumped trillions of newly minted dollars into the economy without a commensurate increase in productivity. Many economists have argued that prices have increased writ large to balance out the extra money supply.

In this line of reasoning, eggs, or other staple products for that matter, won’t easily become cheap again—there are simply too many dollars chasing them.