Bloomberg points out eggs were big in the PPI, accounting for 80% of the y/y rise (egg prices spiking due to avian flu). I wondered what eggs accounted for in the food at home component of the CPI.
Didn’t have the CPI subcomponent for eggs handy, so I took the BLS not-seasonally-adjusted price of a dozen large grade A eggs, seasonally adjusted using moving (geometric) average and decomposed the CPI-food at home cumulative increase since January 2024.
Figure 1: CPI-food at home (s.a.), contribution from eggs (brown bar), contribution from rest-of-food-at-home (blue bar), calculated using log differences. Source: BLS via FRED, and author’s calculations.
This indicates food-at-home (aka “groceries”) would be pretty close to flat in 2024 were it not for eggs.
Calculations:
- 2023 weight for eggs in CPI: 0.178%
- 2023 CPI-food at home weight in CPI: 8.072%
- Implied 2023 weight of eggs in CPI-food at home: 2.205%
For comparison, weight of eggs in PPI (final demand): 0.07%
Here’re consumer prices for a dozen eggs vs. PPI (final demand) for large eggs.
Figure 2: Dozen large eggs (blue, left log scale), and PPI (final demand) large eggs (tan, right log scale), both normalized to 1980M01=1. NBER defined peak-to-trough recession dates shaded gray. Source: BLS via FRED, BLS, NBER, and author’s calculations.
Off topic, unless you squint – Back in July, I linked to a book written by Peter Turchin entitled “End Times”:
https://books.google.com/books/about/End_Times.html?id=LyaJEAAAQBAJ&printsec=frontcover&source=kp_read_button&hl=en&newbks=1&newbks_redir=0&gboemv=1#v=onepage&q&f=false
The thesis of the book is that when those at the top grab too much of society’s good stuff for themselves, societies collapse. Since being among the economic elite becomes the only way to lead a materially good life, there is a scramble to join that elite, and when there isn’t room enough at the top for everyone scrambling to get in, societal cohesion breaks down.
Turchin sees evidence that the U.S. has been on the path to such a breakdown since the late 1970s. I don’t recall that he mentions neo-liberalism, but the timing is notable.
Anyhow, I mention “End Times” again because of the results of the U.S. election. The majority of voters picked a convicted felon who incited insurrection in an attempt to take over the government. Voters picked him largely because of dissatisfaction with their economic situation. The result is likely to be tax cuts for the rich, increased business concentration, reduced oversight of health and safety and attempts to reduce retirement benefits. I assume the irony here is clear.
Anyhow, I went looking to see if Turchin has commented on the outcome of the election, and he has:
https://www.theguardian.com/us-news/2024/nov/30/the-deep-historical-forces-that-explain-trumps-win
It should come as no surprise that he finds validation for his ideas in the results.