Prices of breakfast staples such as eggs, coffee, milk and bacon are finally coming down after more than a year of inflation turning up the heat on grocery bills and the gas to cook them
CENTRAL VALLEY – Breakfast is the most important meal of the day but it has also been one of the most expensive.
After more than a year of getting burned by the griddle of inflation, it may be time to look on the sunny side of things, starting with eggs. Consumers were hurting just a few months ago when prices soared to $12 per carton for cage-free eggs, with a typical but elevated price at stores a month ago of around $8 a dozen. That is enough to put a crimp in your omelet.
The culprit has been a bird flu that has decimated the flock of chickens. USDA said historic outbreaks of avian flu have killed more than 58 million backyard and commercial chickens and turkeys since February 2022. Others are putting the blame on California’s Proposition 12. Approved in 2018, the initiative established minimum space requirements for egg-laying hens, calves raised for veal and pigs for pork, which some claim increased the cost of those products.
Either way, the prices of eggs are slowly dropping. This last week USDA reported California egg prices dropped another 21 cents in a week with large eggs selling for $4.40 a dozen. Trader Joe’s was selling California cage-free eggs for $2.99 a dozen last week – just like the good ol’ days!
In the past month there has been a steady drop in price on the wholesale level across the country as the egg market returns to a more normal level. In 2023, wholesale egg prices will fall 26.8%, USDA Chief Economist Seth Meyer said in a presentation at the annual USDA Agricultural Outlook Forum in Virginia last week.
Cups of Coffee, Milk
How about that cup of java- no decent breakfast would be complete without it.
The price of wholesale coffee, mostly from South America, had been burning pocketbooks at $2.40 a pound last summer. Last week, the wholesale price was down to $1.86/lb based on better rainfall in Brazil. The price fell from last summer but has climbed since October based on, can you believe it, too much rain. At the store a good buy on a gourmet coffee at Trader Joe’s is $8.99 for 14 ounces of “Wake Up Blend”.
Other essential breakfast staples include milk and butter, not just on toast and in your cereal, but in all baked items and as ingredients in other foods.
The year 2022 saw record prices for wholesale milk and butter but they have also been trending down in the past few months. Butter has dropped to $2.35/lb in February from $3.20 last summer. Milk has dropped to $17.86 per hundredweight in February from $22 in November.
Rounding Out the Plate
As for bacon, pork prices are down 30% from last summer. Target is selling a pound of bacon for $4.39 this week and it’s $4.98 at Walmart, not the $7 per pound seen a few months ago.
For you breakfast oatmeal eaters out there – it’s time you catch a break too. Oats are a worldwide commodity too and it is now half the price it was last summer. Cereal makers ought to start passing on the savings.
Turning Down the Stove
Perhaps the biggest disinflationary commodity going forward is a product you use every day to make breakfast, heat your home and that utilities use to make electricity – natural gas.
In California, natural gas prices skyrocketed in January based on a December spike in the wholesale price delivered by pipeline that pushed your gas and electricity bills two to five times higher in January. Regulators are investigating why this happened suspecting market manipulation even as nationwide natural gas prices plunged.
SoCalGas (SCG) warned residents their gas bills would likely more than double as a cold snap across the nation drove up demand with dwindling supply. The U.S. Energy Information Administration stated that natural gas supply did not keep pace with demand from Western Canada to California, which were hit by a cold front from November to mid-December. Specifically, in the first three weeks of December, natural gas consumption in the residential and commercial sectors in the Pacific Northwest and California combined increased by 23% from the second half of November. In addition, natural gas consumption increased 14% for the electric power sector.
Nationwide natural gas is suddenly a bargain and should help push inflation down going forward due to its importance to the economy. A recent news report notes the futures price for natural gas has dropped five-fold.
“For the first time since September 2020, Henry Hub natural gas futures plunged below $2 per mmBtu (metric million British thermal unit, the standard unit of measurement for natural gas) this week before bouncing back to a more palatable level of $2.4/mmBtu. The combination of a relatively mild winter in key US consumption hubs and excess domestic volumes on the back of the Freeport LNG outage depressed gas futures that only six months ago were trading above $10/mmBtu.”
SoCalGas says that its customers can expect February bills to be about 68% lower compared with January, as there has been a decrease in the wholesale price that SoCalGas pays for natural gas.
If the price of breakfast is heading lower, maybe dinner won’t be far behind.