The Cost of Breakfast Rises to Record Levels as Food Inflation Persists in the US and the EU
Breakfast, the most consumed meal of the day, has become costlier than ever, owing to the price inflation of products such as eggs, bread, milk, butter, and orange juice. In 2023, food inflation continues to rise in the US and the EU. According to the Bureau of Labor Statistics, the US consumer price index rose to 300.84 points in February, a 6% YoY increase, while food inflation in the EU rose by 18.4% MoM in Jan-23.
Source: Tridge, US Bureau of Labor Statistics
Source: Tridge, European Commission
The price of eggs has risen significantly due to the avian influenza pandemic that has spread across multiple countries globally, creating a supply shortage. Tridge has reported extensively on the issue, citing the US and the EU as among the most affected regions. According to the US Bureau of Labor Statistics, the average price of eggs rose to USD 4.82 per dozen in Jan-23 compared to USD 1.93 per dozen in Jan-22, a 150% increase and the record price. The case is similar in the EU, where egg prices rose to EUR 2.51 per kg in Feb-23, a 70.8% YoY increase, according to the European Commission. Czechia witnessed the highest increase at 85% YoY, with Hungary, Slovakia, Bulgaria, Croatia, and Estonia all recording egg price inflation above 50% YoY.
Low wheat supply in the US resulted in white bread trading at USD 1.90/lb in Feb-23, from USD 1.58/lb in Feb-22, a 20.3% increase and the highest in history. Bread prices have been affected by the decrease in wheat acreage in the US due to farmers shifting to more lucrative crops such as corn. The Black Sea conflict has also impacted global wheat supply, with many countries in the bloc witnessing a significant rise in bread prices. In Jan-23, Hungary experienced an 87.7% YoY increase, while Estonia and Latvia saw the price of bread rise by 46.5% and 42%, respectively.
The price of milk, another breakfast staple, has risen significantly owing to increased production costs. In Feb-23, fresh whole milk prices in the US rose to USD 4.16 per gallon, a 7.2% MoM increase, slightly below USD 4.20 per gallon in May-22, the highest on record. In the EU, milk prices rose to EUR 0.56 per kg in Jan-23, a 34.7% YoY increase, and just slightly short of the EUR 0.58 per kg recorded in Dec-22, the highest in over ten years. Butter prices have followed a similar trend. In the US, butter traded at USD 4.87/lb on Feb-23, up 28.8% from USD 3.78/lb on Feb-22, and the highest price in over five years.
Orange juice is also a key part of breakfast meals, especially in the US. However, disease and bad weather have depleted orange juice stocks, causing prices to rise to record levels. In Feb-23, Frozen Concentrate Orange Juice (FCOJ) prices rose to a record USD 2.98 per 12-ounce can, up 8.4% from USD 2.75 per 12-ounce can, in Feb-22, according to the US Bureau of Labor Statistics. Breakfast cereal prices have also witnessed significant growth over the past year. In Q1 2023, a box of Crunch Berries in the US rose to USD 10.53 from USD 4.92 in Q1 2022, a 114% increase, while Cap’N Crunch rose to USD 10.24, a 41.85% YoY increase.
As a result of these elevated prices, consumer demand for products such as eggs and orange juice has started to wane, resulting in retailers stocking lower volumes of these products. According to the Florida Department of Citrus, in Feb-23, OJ was available at 95.4% of US retail stores, down 0.7% YoY, while retail orange juice sales fell by 5.94% YoY. The inflated prices of breakfast options have also started to reduce the profit margins of breakfast restaurants, leading to many establishments cutting costly items, such as eggs, off the menu while promoting cheaper options, such as pancakes, which can be made with milk, egg, and flour alternatives such as rice flour, chia seeds, applesauce, and soy milk.
Tridge expects prices to remain firm in the next few weeks as supply shortages of breakfast items, such as orange juice and eggs, are expected to persist, and leading food groups plan to hike prices. For example, Nestle plans on raising dairy product prices to offset increasing production costs, and PepsiCo looks to increase the price of its Tropicana Pure Premium orange juice brand. However, increased milk collection numbers leading into the spring flush in Europe could add bearish sentiments.
For related stories, please refer to the links below.
1. The Impact of the Worsening Bird Flu Crisis on Global Markets
2. FCOJ Futures Rise To Record Levels As Hurricane Ian Worsens Florida’s Citrus Supply