Eggflation fears return due to bird flu concerns
A bird flu outbreak at one of Cal-Maine Foods' facilities (CALM) is prompting new "eggflation" concerns. According to the egg-producer, about 684,000 laying hens, or approximately 1.6% of the company’s total flock is impacted.
Yahoo Finance's Brooke DiPalma, Josh Schaefer, and Alexandra Canal discuss the impact of rising prices on consumer choices.
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Video Transcript
BROOKE DIPALMA: Today, we're talking eggflation. Yep, folks, it's back. It's consumers could pay higher prices after a breakout of bird flu at one of the US top producers, Cal-Maine Foods. Now, guys, it's important to note here that Cal-Maine reported that one of their facilities in Kansas they did test positive for the highly contagious avian flu.
Now what exactly that means is that they had to close down the facility. This is impacting 1.6% of its flock, that's 684,000 laying hens. Now we did see egg prices come down over the past year 22.3% year-over-year, it's down according to the latest CPI report. That was because, ultimately, these producers got the time to rebuild their flock. Now this could impact that.
ALEXANDRA CANAL: Yeah, it feels like this is a story we've talked about before. I mean, I thought we were over this, but it is interesting because in that November CPI print, we did see a prices increase 2.2% month over month after being relatively unchanged in October. We also saw egg prices decline in the summer, in both July and August. So interesting to see that uptick now.
And then you have this bird flu issue that could cause even more problems. And at the end of the day, even though headline inflation is moderating, food inflation is still pretty sticky, especially food away from home with restaurants, and the wages, and all those issues. But at the end of the day, consumers, they care about their food. If that's not coming down, they're not going to think anything is coming down.
BROOKE DIPALMA: Right.
JOSH SCHAEFER: Right, but I think there are other things too that you could also argue, like bigger deals, right, than eggs, when you think about maybe gas prices. Eggs are a big deal.
ALEXANDRA CANAL: Is it affordable still?
JOSH SCHAEFER: Eggs are a big deal. I just think when you look at where inflation is and isn't graphic, that we use a lot on our website and things-- like inflation in general, in most categories is coming down. Now, of course, prices are still high, but I don't know if eggs are going to move the needle to that extent, would be my argument, but--
ALEXANDRA CANAL: Eggs are a big story for a long time.
JOSH SCHAEFER: No, they were.
BROOKE DIPALMA: Inflation was something that we've been covering for-- at least, for Ali and I--
JOSH SCHAEFER: They were, but I think $5 eggs matter when everything else is more expensive, right? If my gas is below $3--
ALEXANDRA CANAL: If you look at this--
JOSH SCHAEFER: --I don't care if eggs are $5.
BROOKE DIPALMA: Josh, if you look at this breakdown right here, you're seeing eggs back in 2019, $1. Then you're seeing them jump to roughly $3.60 last year. Now they're at $2.14. As soon as that consumer realizes that they see egg prices jump, like Ali said, they really do have this perception that they no longer can afford things, that are too expensive. It's gas and groceries that really define how consumers think about the economy.
I mean, it sounds really dramatic, but this could ultimately cause consumers to pull back on their spending a little bit if they think that groceries are getting more expensive.
JOSH SCHAEFER: I don't want to harp on the point, but my point was the other thing you said, you said gas and groceries, right?
BROOKE DIPALMA: Yeah, Gas is headlinging.
JOSH SCHAEFER: Well, gas is headed lower, and analysts just told [INAUDIBLE] it might be below $3 soon. So I just think you have to look at both aspects of it. And if I'm paying less than $3 for gas, I don't know, maybe it's OK.
