Falling wholesale prices could lead to cheaper eggs in the near future

Takeaways

• The Producer Price Index dropped more than economists anticipated in March following a report that showed a surprising drop in consumer inflation.
• The drop can be partly attributed to the 36% decrease in egg prices. Fuel prices dropped by 11%.
• A 7% increase in steel mill products suggested that President Donald Trump’s recently enacted tax on aluminum and steel imports was having an effect.

Egg prices may soon be reduced for grocery shoppers.

In March, the wholesale price of chicken eggs fell 36.2% over the previous year. This was part of an unexpected decline in the Producer Price Index (PPI), which is geared towards wholesalers. The price drop comes after an outbreak of bird flu helped to increase the egg prices, creating a burden for consumers.

Wholesale pricing trends, while not directly related to consumer prices, can have an impact on them. This could indicate that there is some relief in the near future for egg prices.

Lower Gasoline Prices Help Push Wholesale Price Lower

Overall, wholesale prices fell 0.4% in March compared with the prior month, coming in below economists surveyed by The Wall Street Journal and Dow Jones Newswires’ projections of a 0.2% monthly increase in the PPI. Compared with a year ago, wholesale prices, as measured by PPI, were up 2.7%, also declining from February levels. 

The Bureau of Labor Statistics reported that while egg prices fell significantly, the downward trend of the March PPI report mainly reflected an 11.1% decline in gasoline prices. This was responsible for nearly two thirds of the goods price decline in March. 

The report comes after Thursday’s Consumer Price Index data, which showed that March saw lower inflation for consumers. While this is great news for consumers and the economy, economists warn that this may only be temporary, as President Donald Trump’s policies on tariffs are expected to drive prices higher in the coming months.

Steel mill prices rise following Trump tariffs on metals

Wholesalers are already feeling the effects of tariffs. The PPI showed, in March, that prices for steel mills products increased by more than 7% after Trump implemented his 25% tariff on imports of aluminum and steel. 

Oren Klachkin, economist at Nationwide Financial Markets, said that “tariffs had a little impact on the March PPI below the surface. We expect to see a lot more passthrough in months ahead.”