Egg Prices See Largest Monthly Drop in 72 Years, But Still Aren't Back to Normal

Egg prices have sent shoppers on a rollercoaster this year. May’s CPI shows inflation slowed, but food prices, housing prices and the cost of used vehicles are all attributing to current inflation.

The most sizable drop came with egg prices. The CPI shows egg prices now average $2.66 per dozen, which represents the following changes:

• 13.8% lower month-over-month
• That represents the largest monthly decline since January 1951
• Year-over-year, prices are only down 0.4%

Before shoppers get too excited, some historical perspective shows egg prices are still higher than average. A decade ago, egg prices were $1.91 per dozen. Even in 2020, egg prices were lower, averaging $1.51, which is more than $1 lower than what grocery shoppers are paying today.

While the sudden decline may seem like shoppers are getting a bargain, it’s similar to what drivers experience with gas prices. When prices for a gallon of gas go from $2 to $4, then come back down but only to $3, it feels like prices are much cheaper, when in reality, prices are still higher than they were before the rapid spike.

Why Did Egg Prices Spike Higher Earlier This Year?

According to economists, the rapid rise in egg prices was a function of supply and demand. In January, avian influenza caused U.S. egg producers to lose more than 50 million birds, many of those being commercial laying flocks. Couple that with high holiday demand for things like baking, and the two factors clashed to create higher prices at the store.

“We've had a significant reduction in supply from depopulation this spring and again in the fall and winter,” Lusk told AgWeb in January. “Couple that with inelastic demand for eggs, and you get the price spikes we're seeing.”

Expensive Eggs Ate Into Bacon Demand

The CPI shows the price of bacon and related products fell 9.8% year-over-year. It’s also a 1.4% decline in a month. Prices may be on the decline, but one livestock economist thinks it’s possible the high egg prices also caused shoppers to buy less bacon.

During World Pork Expo last week, Steve Meyer of Partners for Production Agriculture, explained why he has a bleak outlook for the pork producers' profits this year. One reason is demand. Meyer also explained it's not just due to the 35% spike in input costs compared to 2019, but also lower hog prices.

Part of the problem is a decline in domestic demand, which is driven by wholesale demand, among four other factors. One of those four is the price of complementary goods, like eggs. As the rapid run-up in egg prices caused some shoppers to scale back on buying as many eggs for breakfast, that decision also hurt bacon demand and prices, as well. 

The Real Winner of the 2023 Egg War

Higher egg prices did bode well for backyard flocks. More Americans decided to try their own hand at raising a backyard flock, and as a result, chicken suppliers like Tractor Supply cashed in.

According to Forbes, Tractor Supply, which is America’s largest seller of live poultry, could top the all-time record set in 2020. During the pandemic, more people had time at home, and Tractor Supply reportedly sold 11 million birds. This year, Tractor Supply’s foot traffic jumped 60%. 

Tractor Supply also acquired Orscheln Farm and Home this year. The announcement came last fall, but the transition took place this year, adding more than 80 stores under the Tractor Supply brand. Last year, Tractor Supply's CEO said the acquisition means Tractor Supply would now have more than 2,100 stores and 50,000 employees. The company also projected an excess of $14 billion in annual revenue.