The January 2025 Food Price Outlook released Friday shows while food price inflation has slowed overall, key sectors like eggs and beef remain volatile due to supply chain and input cost pressures.
Egg prices saw the biggest spike, according to USDA’s data, up 37% year-over-year. But the U.S. Bureau of Labor Statistics data shows the price of Grade A eggs in December was up 93% since January 2024. And when you look ahead, USDA expects outbreaks of highly pathogenic avian influenza to continue to cause egg prices to climb.
When it comes to USDA’s specific outlook released Friday, the agency uses recent trends in food prices based on Consumer Price Index (CPI) and Producer Price Index (PPI) data through December 2024.
Key Highlights of the report include:
- Overall inflation trends:
- Food prices increased by 2.5% year-over-year as of December 2024
- Food-at-home prices rising by 1.8% and food-away-from-home prices increasing by 3.6%.
- 2025 forecasts:
- Food prices expected to rise by 2.2%, slower than the historical average.
- Food-at-home prices predicted to grow by 1.3%, while food-away-from-home prices are forecast to increase by 3.6%.
- Insights Within Categories:
- Egg prices saw a sharp rise of 36.8% year-over-year in December 2024, with 2025 prices projected to climb by 20.3% amid ongoing supply constraints.
- Beef and veal prices are expected to increase modestly by 1.5% in 2025, following a 4.9% rise in 2024.
- Pork and fats/oils prices are forecast to decline in 2025, with decreases of 0.8% and 1.6%, respectively.
- Fresh fruit prices are anticipated to rise by 0.7%, while dairy product prices are expected to increase by 1.3%.
Producer Price Insights:
The PPI, which tracks wholesale prices, suggests continued volatility in farm-level and wholesale markets, with significant fluctuations predicted for eggs, milk, and fruits due to factors such as extreme weather and disease outbreaks. Farm-level egg prices are expected to see a sharp increase of 45.2% in 2025, with a wide prediction interval reflecting uncertainty.
Overall, while food price growth is expected to moderate compared to recent years, specific categories remain susceptible to sudden price shifts driven by global and domestic factors.
What’s the Deal with Egg Prices?
Sticker shock with eggs stared shoppers in the face to end 2024. According to the U.S. Bureau of Labor Statistics, the increase is even more staggering. They show the average cost of a dozen Grade A large eggs was $4.15 in December, up from $3.65 in November and $2.15 in January 2024.
According to livestock economists at Texas A&M University, the widespread outbreaks of highly pathogenic avian influenza, or HPAI, continue to be the culprit, driving egg prices to record highs across the U.S. Commercial laying flocks have been hit especially hard.
“There is seasonality to egg prices based on demand, but the cutting of supplies, in this case by disease, has driven prices higher,” says David Anderson, Ph.D., AgriLife Extension economist and professor in the Texas A&M Department of Agricultural Economics. “I wouldn’t be surprised to see them go higher in the next report, but there is price volatility when you consider the supply and demand factors in play.”
USDA’s Animal and Plant Health Inspection Service reports since first detected in 2022, 1,410 flocks have been impacted, including 637 commercial operations. As a result, 134.7 million birds have been culled.
Georgia Hit for First Time By Avian Flu
Just last week, the largest poultry producing state in the nation reported its first case of avian flu. The Georgia Department of Agriculture confirming the virus at a farm in Elbert County. In reaction, the Georgia Depart of Agriculture says all poultry exhibitions, swaps, meets and sales have been suspended as a precaution. The Department says cleanup is currently underway and nearby operations are under quarantine.
According to Greg Archer, Ph.D., AgriLife Extension poultry specialist and associate professor in the Texas A&M Department of Poultry Science, one reason the HPAI is spreading so quickly is because of environmental conditions. According to Archer, the disease prefers temperatures below 90 degrees.
“Farmers take biosecurity seriously because they’ve been dealing with the threat for years,” he said. “The big question this time is the strain mutations and how outbreaks in poultry facilities are occurring.
Archer also says migratory birds have historically been the main carrier of the disease. The pathogen will enter the poultry house through migratory bird feces on the bottom of the show or by a truck of vehicle that transports materials or feed between farms.
The Time It Takes to Rebuild
Once a flock is hit, the operation culls the animals, and replacing lost birds takes times. According to Archer, it can take 20 or more weeks for birds to develop from incubated eggs to pullets to production-ready laying hens.
In some cases, entire farms are wiped out. Archer says farmers bring those farms back online in phases to stagger their production by new and older birds.
As they do so, the eggs produced by younger and older birds are typically smaller while hens in their prime lay large to jumbo eggs.
And the key in building back the supply of eggs in the U.S., according to Archer, is rebuilding the flocks impacted by avian flu.
The other recent wild card, is recent transmission patterns in new animals, including dairy cows and pigs.
Consumer Demand and the Unknown
Now the question is how much consumers are willing to pay, and if it will impact demand?
“Producers will be expanding their flocks to produce more eggs to meet demand and capitalize on the high prices, while consumers might cut back,” says Anderson. “That combination aligning with fewer instances of avian influenza as the weather warms up would likely put downward pressure on prices. There is a natural ebb and flow to egg prices from seasonal supply and demand, and HPAI has just added volatility to the market.”
