PracticalDad Price Index – December 2014:  Egging on Inflation

The December 2014 data for the PracticalDad Price Index was collected and tabulated and while the Total Index of the 47 item marketbasket was static from November’s 111.15 to 111.18 (November 2010 = 100), the 37 item Food-Only Sub-Index rose to a new high of 115.13 (November 2010 = 100).  This surpasses the previous Sub-Index high of 114.73 reached in September 2014.

Of the 47 items in the marketbasket – 37 foodstuff and 10 non-foodstuff – there were actually more items that decreased in price than increased, 10 decreases to 7 increases with the remainder unchanged.  But these were smaller decreases that were offset by a major increase of approximately 37% in the retail price of a dozen large eggs; the average November 1 price of a dozen large eggs was $1.89 to December’s $2.62 per dozen.  Why the rise?  First, the data from the past four years of the PracticalDad Index demonstrates a Fall/Winter spike in egg prices that subsequently drops back and it’s likely that this is another example of those same spikes.  Second however, the wholesale price of eggs across the country rose signficantly in the past several months because of increased foreign demand for American eggs.  Just as there’s been increased foreign demand for American dairy products because the New Zealand dairy suppliers are also affected by a drought that impacts their own production, Mexico has seen a major decrease in production because of the forced destruction of poultry flocks affected by an outbreak of Avian Influenza.  This poultry virus is highly contagious and the only real measure to combat it is to destroy any flock – healthy birds included – in which it’s been detected.  It’s the possibility that this can mutate and be passed on to humans that keeps epidemiologists awake at night.  Any significant outbreak will accordingly affect supply and Mexico has consequently met its egg demand by importing more from the US.

Will eggs again drop in price in future months?  I suspect so, but not to previous levels as before.

There is one other curious observation from the past several months of price surveillance.  In two of the three supermarkets – each of which is wholly unrelated to the others – I’ve been seeing empty sections on the shelves.  These spaces aren’t just because the product hasn’t yet been restocked, but on several occasions there have been small signs stating that the items are discontinued.  When I return a different time, that shelf space is filled with another item.  I haven’t collected any data but am working purely on observation.  It does however, make me wonder whether all of the dislocation that we’re seeing in this slow motion real-economy train wreck is starting to have an effect on the supply chain and if so, to what extent it will spread.

And now for the past six months of results. 

PracticalDad Price Index – December 2014
Month Total Index Food-Only Index Spread
7/14 110.20 113.22 3.02
8/14 110.14 113.71 3.57
9/14 111.07 114.73 3.66
10/14 111.11 114.45 3.34
11/14 111.15 113.87 2.72
12/14 111.18 115.13 3.95

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