Egg prices hit a record high after the biggest jump in almost a decade The average price of a dozen large, grade A eggs reached $4.95 in January, up more than 96% from a year ago

 

U.S. consumer prices increased by the most in nearly 1 1/2 years in January, with Americans facing higher costs for a range of goods and services, reinforcing the Federal Reserve's message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.

The hotter-than-expected inflation reported by the Labor Department on Wednesday was likely partly due to businesses raising prices at the start of the year, evident in a record surge in the cost of prescription medication and an increase in motor vehicle insurance.

The report followed a pattern of CPI numbers overshooting expectations every January, which some economists said suggested that the seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data, were not fully accounting for the one-off turn-of-year price hikes.

Nonetheless, they said the so-called residual seasonality was not responsible for all of the broad rise in prices, which offered a cautionary note to President Donald Trump's push for tariffs on imported goods that have been panned by economists as inflationary.

Trump was elected on promises to lower prices for inflation-weary consumers. High inflation could imperil the Trump administration's agenda, including tax cuts, which could overstimulate a healthy economy, and mass deportations of undocumented immigrants that are seen causing labor shortages and rising costs such as wages for businesses.

"The moderation we saw in consumer inflation last summer is no longer visible now," said Scott Anderson, chief U.S. economist at BMO Capital Markets. "The problem for the Fed is this isn't just a one-month event but looks like a real multi-month firming of inflation pressures."

The consumer price index jumped 0.5% last month, the biggest gain since August 2023, after rising 0.4% in December, the Labor Department's Bureau of Labor Statistics (BLS) said.

Shelter, which includes hotels and motel rooms, increased 0.4% and accounted for nearly 30% of the rise in the CPI. That followed two straight monthly gains of 0.3%.

Food prices rose 0.4% after increasing 0.3% in December. Grocery store prices surged 0.5%, with the cost of eggs soaring 15.2%, the largest increase since June 2015. That accounted for about two-thirds of the rise in prices at the supermarket.

An avian flu outbreak has caused a shortage of eggs, driving up prices. Egg prices, which fueled much of the voter discontent with inflation, increased 53.0% year-on-year in January.

Prices also rose for meats, poultry, and fish as well as for nonalcoholic beverages and dairy products. Fruits and vegetable prices fell by the most in nearly two years. Gasoline prices increased 1.8% while natural gas cost 1.8% more, but electricity prices were unchanged.

In the 12 months through January, the CPI increased 3.0%. That was the biggest gain since June 2024 and followed a 2.9% advance in December. Economists polled by Reuters had forecast the CPI gaining 0.3% and rising 2.9% year-on-year.

The BLS updated CPI weights and seasonal adjustment factors to reflect price movements in 2024. Economists had expected the updated seasonal factors to temper the rise in the CPI.

Businesses could also have preemptively raised prices in anticipation of higher and broad tariffs on imported goods.

An employee checks pears at a 365 by Whole Foods Market grocery store ahead of its opening day in Los Angeles, U.S., May 24, 2016. REUTERS/Mario Anzuoni/File Photo Purchase Licensing Rights, opens new tab

Trump early this month suspended a highly telegraphed 25% tariff on goods from Canada and Mexico until March. But a 10% additional tariff on Chinese goods went into effect this month. Economists expect that those tariffs, when they are eventually enforced, will lift inflation.

Fed Chair Jerome Powell appearing before lawmakers for a second day on Wednesday said the CPI report highlighted that the central bank was "not quite there yet" in its quest to bring inflation back to its 2% target.

Stocks on Wall Street slumped. The dollar eased versus a basket of currencies. U.S. Treasury yields rose.

A line chart titled "Annual change in US Consumer Price Index" that compares two key inflation metrics over the past five years.

RATE CUT HOPES DIMINISHING

Chances of a rate cut this year are diminishing. Consumers' one-year inflation expectations surged to a 15-month high in early February as households perceived that "it may be too late to avoid the negative impact of tariff policy," a University of Michigan survey of consumers showed last week.

Higher inflation, together with a stable labor market, has some economists believing the Fed's easing cycle is over.

The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range in January, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.

Excluding the volatile food and energy components, the CPI climbed 0.4% in January. The so-called core CPI increased 0.2% in December. Residual seasonality has tended to be more pronounced in the core CPI.

Shelter costs increased 0.4%, boosted by a 1.7% rebound in the prices of hotels and motel rooms. But owners' equivalent rent moderated further, rising 0.3%. Prescription medication prices jumped by a record 2.5% and hospital services increased by 0.9%. The cost of motor vehicle insurance soared 2.0%.

Airline fares rose 1.2%, slowing after December's 3.0% surge. There were also increases in the prices of recreation, used cars and trucks, communication, and education. Apparel prices fell 1.4%. Overall, core goods prices rose 0.3%.

In the 12 months through January, the core CPI rose 3.3% after advancing 3.2% in December.

Based on the CPI data, economists estimated that the core personal consumption expenditures price index rose 0.4% in January after gaining 0.2% in December. It is one of the measures tracked by the Fed for monetary policy. Core inflation was forecast to increase by 2.7% after rising 2.8% in December. January's producer price data on Thursday could impact these estimates.

"The risk is tilted toward less easing if the administration's policy mix fuels inflation and inflation expectations," said Gregory Daco, chief economist at EY-Parthenon.

Egg prices continue to surge, hitting record highs amid shortages driven by bird flu outbreaks and inflation.

Egg prices rose 15.2% month over month in January — the highest jump in nearly a decade, according to data released Wednesday by the Bureau of Labor Statistics.

More specifically, the price of a dozen large, grade-A eggs reached $4.95 in January, up over 96% from a year ago when prices were just $2.52.

The increases come as prices for all consumer goods have gone up faster than expected. The consumer price index (CPI) was up 3% in January from a year ago, the bureau reported. CPI rose 0.5% after rising 0.4% in December, above the 0.3% increase expected by Wall Street, according to estimates compiled by FactSet (FDS-0.34%).

Egg prices were particularly affected by a spike in bird flu infections, which has led to egg shortages in the nation’s grocery stores.

Trader Joe’s has responded to the supply crunch by issuing a nationwide limit of one dozen eggs per customer per day due to “ongoing issues with the supply of eggs.”

“We hope these limits will help to ensure that as many of our customers who need eggs can purchase them when they visit Trader Joe’s,” a company spokesperson told Quartz in an emailed statement.

Several news outlets have also reported that other grocery stores are implementing similar limits. Egg limits have been reported in Kroger (KR+0.85%), Costco (COST+0.54%), and Whole Foods (AMZN-1.42%) locations throughout the U.S.

How is the bird flu causing an egg shortage?

The primary reason for the egg shortage is a shrinking of the nation’s egg-laying hen population due to the ongoing bird flu outbreak.

H5N1 is a type of bird influenza virus that was first detected in 1996 in domestic waterfowl, such as ducks and geese, in Southern China. It is highly contagious among birds. A new outbreak of the virus was first detected in 2020 among wild birds in Europe. This outbreak eventually made its way to the U.S. in 2022.

Since then, over 157 million birds, including commercial poultry, have been infected, according to the U.S. Centers for Disease Control and Prevention (CDC). In just the past 30 days, over 23 million cases among U.S. birds were detected.

When health officials confirm bird flu in a flock, the birds are culled — a euphemism for killed — to stop the virus's spread. A farm in N.Y. recently made headlines after being forced to euthanize 100,000 ducks following a positive test for the virus.

The U.S. Department of Agriculture reported last month that the country’s egg production fell 3% in December, and the population of all egg-laying poultry fell 2% from last year.

Coca-Cola is considering a return to plastic bottles as it grapples with rising aluminum costs from President Donald Trump’s import tariffs.

During the company’s Feb. 11 earnings call, CEO James Quincey discussed how Coca-Cola (KO+1.15%) plans to manage the increased costs from these tariffs. While he acknowledged that a 25% hike in aluminum prices is significant, he emphasized that it wouldn’t drastically affect the company’s bottom line.

“It’s a cost. It will have to be managed,” Quincey said. “It would be better not to have it relative to the U.S. business, but we are going to manage our way through.”

Coca-Cola may take a range of actions to absorb the higher prices, which could impact the beverage giant’s recycling goals. In 2018, Coca-Cola announced plans to recycle all of its packaging by 2030. But in December the company revealed new plans to use 30-35% recycled plastic globally and ensure that 70-75% of its bottles and cans are collected for recycling by 2035.

Pizza takeaway in a cafe window in London. 

Image: Mike Kemp/In Pictures (Getty Images)

While supporters say these tariffs are intended to protect and strengthen U.S. industries, the tariff could have wide-reaching consequences for companies that rely on aluminum packaging. While the increased costs are not expected to drastically affect Coca-Cola’s massive U.S. operations, Quincey told investors that the company would adjust its approach to keep prices manageable for consumers.

The Atlanta, Georgia-based company’s decision to shift back to plastic bottles comes amid broader changes within Coca-Cola. The brand saw strong fourth-quarter earnings, driven by price hikes on its soda, energy drinks, and juices.

Healthier options are also growing, with Coca-Cola Zero Sugar up 13% as demand for low-calorie drinks rises, further fueled by the boom in diabetes and weight-loss drugs like Ozempic and Wegovy. The Fairlife dairy line, a key part of Coca-Cola’s pivot away from sugary beverages, also exceeded expectations, with earnings surpassing projections and reaching around $6 billion this year. 

Banking giant JPMorgan Chase has begun a round of layoffs impacting "fewer than 1,000 employees," with more downsizing expected in mid-March, May, June, August, and September, Barron's reports, citing anonymous sources. It's not known how many people in total will be affected. The staff cuts are happening after JPMorgan notched record profit and revenue in 2024, and while the bank faces growing backlash over its decision to force workers back to the office five days a week.

U.S. sales for Shein and Temu have plummeted since the Trump administration announced harsher trade policies aimed at China — even after it reversed course and left a duty exemption on inexpensive packages in place. An analysis of debit and credit card data shows that Shein’s U.S. sales fell as much as 41% from Feb. 5-10, while Temu’s dropped 32%. It suggests the new geopolitical climate is having “a chilling effect on American consumers,” Bloomberg writes.

While leaders of some of the country's largest corporations are hopeful they can mitigate the impact of recent U.S. tariffs, many small business owners could feel a tighter squeeze. As of 2021, small and midsized companies accounted for 41.2% of Chinese imports, and for businesses with narrow operating margins, reducing reliance on tariff-impacted Chinese suppliers is easier said than done. Absent other cost savings, many small businesses may be forced to resort to price hikes.

U.S. President Donald Trump says trade wars are easy to win. If so, his 25% tariffs on steel, opens new tab and aluminium, opens new tab imports ought to have big overseas producers like Rio Tinto (RIO.L), opens new tab, (RIO.AX), opens new tab begging for mercy. Yet shareholders in the $107 billion miner and rivals like BHP (BHP.AX), opens new tab have already shrugged off concerns. Granted, they may be overly optimistic, or reckon the levies, set to go into effect next month, won't be imposed. But it also could be because the duties would hurt the U.S. the most.

These universal tariffs would hit the major exporting countries like Canada and Mexico as well as other mining players equally. That means none would suddenly have an advantage to jostle for a larger slice of the pie. That may yet change: Trump has indicated he may grant an exemption to Australia. But it's the source of just 1.5% of U.S. aluminum imports and a similarly de minimis amount of steel.

A graphic showing the relative stock price changes since January 20 for Alcoa, BHP, Cleveland-Cliffs and Rio Tinto

Regardless, the U.S. will bear most of the pain. It relies on Canada for around a quarter of its steel and around 60% of its aluminum imports. The only country with the capacity to step in would be top producer China.

But one of the reasons given for imposing the tariffs is to reduce the dominance of the People's Republic - though that's overstated. Sure, its exports of the metal last year of 110 million tonnes were double that of 2020. But only a trickle went directly to the United States. Some get there indirectly, but the vast majority went to countries that use it domestically, a senior industry insider told Breakingviews.

Moreover, another rationale for the levies is to support U.S. producers. With the industry running at around 75% of capacity, steelmakers could increase output. But the short-lived bump in shares of players like Cleveland-Cliffs (CLF.N), opens new tab suggests investors are sceptical.

The outlook is even bleaker for aluminium: domestic players provide around 650,000 tonnes, with imports almost 10 times that. Building more smelters would be costly, take five years or more, and require a degree of certainty about long-term returns that Trump's volatile trade policy cannot provide. It's probably why Alcoa's (AA.N), opens new tab stock has retreated.

That means the main impact of tariffs would be to make the U.S. pay more for its dependence on the same overseas suppliers. That would push up prices for everyone buying end-products from tin foil to cutlery to wind turbines to cars. As the largest consumers, Americans would be the biggest losers.

Fabric and crafts retailer Joann will close about 500 of its 800 locations following its second filing for Chapter 11 bankruptcy protection. The closures will hit all 50 states, with California, Florida, and Michigan among the most affected. The company is seeking a buyer and said in a new court filing that "a subset of underperforming stores" are unlikely to attract interest. There's been a wave of brick-and-mortar store closings already this year.

OpenAI CEO Sam Altman says the artificial intelligence firm is "simplifying" its offerings, nixing the highly anticipated release of the o3 model as a standalone product in favor of "unified intelligence." Altman posted on social media that the upcoming release of GPT-5 "integrates a lot of our technology, including o3." Depending on their tier, ChatGPT subscribers will get progressively higher levels of intelligence. In his post, Altman acknowledged that OpenAI's product offerings were becoming unwieldy as they multiplied.

Days after pausing the Trump administration's deferred resignation plan for federal employees, a Massachusetts judge has ruled that the program can go forward. Several labor unions had challenged the legality of the plan, which seeks to reduce the federal workforce by offering employees a "buyout," but the U.S. district judge ruled Wednesday that the unions lacked legal standing. About 75,000 employees opted into the program, which is now closed, the Office of Personnel Management says.

Chevron plans to lay off 15% to 20% of its workforce as it aims to save up to $3 billion by the end of 2026. The job cuts will span "all of the company's major divisions," Barron's reports. Chevron employs between 40,000 and 45,000 people worldwide, meaning up to 9,000 employees stand to be affected. The company recorded a fourth-quarter loss in its fuel business, and its $53 billion acquisition of Hess is facing uncertainty amid arbitration with rival Exxon Mobil.