Wednesday, April 8, 2020

First Sign of Accelerating Price Inflation: Egg Prices More Than Triple in March

In the EPJ Daily Alert, I have outlined why I expect prices to accelerate after the lockdown is over.

In short, the Federal Reserve is pumping massive amounts on new money into the economy and, at the same time, the production of goods and services has declined. Less supply more monetary demand is a prescription for higher prices.

I hasten to add that this acceleration at first may not be reflected in government price indexes. There will be sectors that will have to discount prices, an obvious example is the cruise line industry. That is post-lockdown there are going to be sectors that people won't be interested in. The discounts will come in these sectors.

But the sectors where people want to buy are going to be the sectors where the price inflation will occur.

We have an example of what I am expecting even before the lockdown is over.

egg prices have more than tripled since the COVID-19 panic.

Egg prices for grocers across the U.S. averaged $3.01 a dozen at the end of last week, compared with 94 cents at the beginning of March, according to U.S. Department of Agriculture data.

The Wall Street Journal reports that retailers anticipate that egg supplies will stay tight. It takes four to five months to raise a hen to egg-laying age, and few farmers so far plan to build new barns or significantly expand their flocks in response to the coronavirus-driven demand surge.

This is an extreme example of what I expect to occur after the lockdown but there will be more money around, it will take time to crank up manufacturing and consumers are going to be making up for months of purchases that they haven't been able to make.



  1. Maybe, but this is Easter week and you know, colored eggs, and every little kid in US is home and bored so mom/dad trying to keep them occupied. I'd give it a week or so to see if this is a trend or blip.

  2. Inflation? Hardly... The price of one product going up is not indicative of other things going up in value. Supply shocks are occurring and for some products more than others...which is indicative of price increases...yes...people buying more eggs probably, but for the underlying reason that people are locked down at home, without work buying only essentials.

    LIKE FOOD...of which eggs are a part of. This article is what I like to call a clear example of selective bias. You might as well have pointed to the skyrocketing price for rice for evidence of your inflation that is...IF you can find it.

  3. Must agree with Anonymous. There has been a run on eggs (just like toilet paper) and some severe supply problems during this shutdown fiasco. That's not a sign of "inflation." (Is the fantastic drop in oil prices a sign of "deflation"? Hardly.) Now whether we will get a general inflation when this nonsense ends depends upon whether supplies can be restored quickly in most markets (doubtful) and/or whether the "money out of thin air" that the Fed generates more than replaces the massive money destruction that has taken place over the last 3 months.

  4. Exactly, Dominick. Wenzel sees inflation as a certainty...that's where the mistake lies.

  5. Last time I went to the store about 3 days ago a dozen eggs cost $5.99 and they had a puchase limit of 1 on them.
    I also talked to a packaged food manufacturer this week and they said demand for their products has gone up 100% of normal.