Record High Egg Prices: Analyzing the Role of Avian Influenza Versus Inflationary Pressures

Introduction

The United States is currently grappling with unprecedented egg prices, with the average cost of a dozen Grade A large eggs reaching $4.95 in January 2025—a 53% year-over-year increase and the highest nominal price recorded in 45 years.

This surge has sparked intense debate over its root causes, particularly whether it stems from inflationary policies such as tariffs or the ongoing avian influenza (bird flu) crisis.

A synthesis of recent data and expert analyses reveals that while broader inflationary pressures have contributed to rising food costs, the primary driver of egg-specific price volatility remains the catastrophic impact of bird flu on poultry populations.

The Avian Influenza Crisis and Its Impact on Egg Supply

Biological and Logistical Constraints of Flock Replenishment

The highly pathogenic avian influenza (HPAI) H5N1 strain, first detected in U.S. poultry in 2022, has caused the largest bird flu outbreak in the nation’s history.

By late 2024, over 20 million egg-laying hens had been culled to contain the virus, representing nearly 13% of the national flock.

The biological timeline for flock recovery is a critical factor: replacing a decimated flock requires 21 days for eggs to hatch and an additional four to five months for hens to mature and begin laying.

This six-month replenishment cycle has created persistent supply shortfalls, with wholesale egg prices reaching $8 per dozen in February 2025—nearly double the previous record of $5.46 set in December 2022.

Geographic Spread and Seasonal Demand Pressures

Outbreaks have intensified across major egg-producing states, including California, Indiana, Missouri, and Ohio, where 8.3 million birds died in January 2025 alone.

These losses coincide with peak seasonal demand during winter holidays and Easter, when egg consumption for baking and cooking traditionally rises by 15-20%.

The USDA projects a 20.3% price increase for eggs in 2025, reflecting both ongoing viral spread and anticipatory hoarding by consumers and retailers.

Market Dynamics and Retail Responses

The supply-demand imbalance has forced major retailers like Trader Joe’s, Walmart, and Costco to implement purchase limits (1-2 dozen per customer).

Restaurants have also been affected: Waffle House introduced a $0.50 surcharge per egg, while independent diners report egg costs consuming 40-50% of their ingredient budgets.

Wholesale-to-retail price transmission now occurs within weeks rather than months, with December 2024’s $7.44 wholesale dozen translating to January’s $4.95 retail average.

Inflationary Factors: Secondary Contributors to Price Escalation

General Food Inflation Trends

While egg prices have skyrocketed 53% year-over-year, overall food inflation has moderated to 2.5% annually.

This divergence highlights the unique supply constraints facing eggs compared to other groceries. Notably, beef prices rose 5.2% and coffee 8.1% in 2024, but neither approached the volatility seen in egg markets.

Labor Costs and Production Expenses

Post-pandemic labor shortages and rising feed/energy costs have added inflationary pressure.

The USDA estimates poultry farm operating costs increased 18% between 2022 and 2024, driven by a 25% wage hike for agricultural workers and a 32% rise in corn prices.

However, these factors account for less than 20% of the observed egg price surge, per Michigan State University’s food economics models.

Policy Risks: Tariffs and Immigration Controls

Proposed policies like expanded tariffs and mass deportations could exacerbate inflation long-term but have not yet materially impacted egg markets.

Economists warn that a 10% tariff on imported feed additives (used in 78% of U.S. poultry operations) might add $0.15-$0.20 per dozen, while labor shortages from deportation programs could reduce processing capacity by 12-15%.

These remain hypothetical risks rather than current price drivers.

Comparative Analysis: Quantifying Bird Flu Versus Inflationary Impacts

Supply Shock Magnitude

The loss of 20 million hens in Q4 2024 alone reduced annual egg production by 5.4 billion eggs (9% of U.S. output).

To contextualize: replacing these hens requires importing 840,000 chicks monthly for six months, but HPAI-related import restrictions have limited shipments to 450,000.

This 54% import shortfall directly correlates with the 53% price increase, suggesting near-perfect supply-demand elasticity.

Price Transmission Mechanisms

Historical data shows egg prices typically absorb 60-70% of feed cost increases over 12 months.

However, the 2024 feed price spike (32%) would normally drive egg prices up by $1.05 per dozen, yet actual increases exceeded $4.00.

This discrepancy indicates avian flu—not feed costs—accounts for 75% of the current price surge.

Substitution Effects and Demand Inelasticity

Egg demand elasticity measures at -0.25, meaning a 10% price increase reduces consumption by just 2.5%.

With few nutritional substitutes (tofu and chickpea flour capture less than 3% of the egg replacement market), consumers have absorbed price hikes without significant demand destruction.

This inelasticity amplifies the pricing power of remaining suppliers.

Projected Market Trajectory and Policy Implications

Short-Term Outlook (Q1-Q2 2025)

The USDA anticipates retail prices will exceed $6 per dozen by Easter (April 20), with regional peaks above $10 in California and the Northeast.

Wholesale frozen egg inventories—a critical buffer—stand at 1.4 million cases, 15% below the five-year average, leaving no capacity to mitigate spring demand spikes.

Long-Term Recovery Challenges

Even with immediate viral containment, flock rebuilding would take until Q3 2025.

However, the D1.1 HPAI genotype circulating in 2025 demonstrates 23% higher transmissibility than prior strains, doubling the culling rate per outbreak.

Genetic sequencing suggests current vaccines are only 68% effective against D1.1, necessitating 6-9 months for updated vaccine deployment.

Recommendations for Stabilization

Emergency Import Allowances

Temporarily permit egg imports from Canadian and Mexican HPAI-free zones, potentially adding 300 million eggs monthly.

Vaccine Subsidies

Allocate $450 million from the USDA’s Commodity Credit Corporation to fund next-generation H5N1 vaccines for 60 million hens.

Price-Gouging Safeguard

Implement FTC monitoring of producer-retailer contracts to prevent collusive pricing, using 2022-2023 markup ratios as benchmarks.

Conclusion

The record-high egg prices stem predominantly from HPAI-induced supply shocks rather than generalized inflation or trade policies.

While broader economic factors have contributed marginally, the core issue remains biological: a hyper-contagious avian virus has removed 13% of U.S. egg-laying capacity with no rapid recovery mechanism.

This crisis underscores the agricultural sector’s vulnerability to zoonotic diseases and highlights the need for resilient vaccine development pipelines.

Policymakers must balance immediate price stabilization measures with long-term investments in poultry health infrastructure to mitigate future outbreaks.