Six eggs used to be £1 - why everyday essentials cost so much more now
The cost of everyday essentials like eggs, bread, and milk has risen significantly in recent years due to factors including avian flu, energy price hikes, and global supply chain disruptions.
Rising costs of staples like eggs, bread, and milk are driven by a combination of events, including avian flu impacting egg production, energy price increases following the Ukraine war, and global supply chain issues. Producers are struggling to pass on these costs due to pre-existing contracts.
Imagine you’re running a bakery. You need flour, yeast, and energy to make bread. Suddenly, the price of flour goes up because of a war far away. Then, the price of electricity goes up too because of another war. Now you have to pay more for everything, and you have to charge customers more for your bread. That’s what’s happening with eggs, milk, and bread – lots of things are costing more because of problems happening around the world. It’s like a domino effect – one problem leads to another, and eventually, the price of the things we buy goes up.
Analysis
The surge in the cost of everyday essentials is a complex issue with multiple contributing factors. The most immediate impact has been the avian flu outbreak, which decimated the UK’s hen population between 2021 and 2023. Millions of hens were culled, dramatically reducing the supply of eggs and driving up prices. According to market researchers Assosia, a box of six eggs that cost £1 in 2022 now averages £1.80. This price increase was compounded by the energy costs associated with keeping the remaining birds indoors, due to restrictions aimed at preventing further outbreaks. Furthermore, the conflict in Ukraine has had a profound effect on global supply chains. Ukraine is a major supplier of grain, a key component of egg feed, and the subsequent rise in grain prices following Russia’s invasion exacerbated the situation. Similarly, energy prices, already elevated due to the war in the Middle East, have increased the cost of production for all food items. Dairy production, reliant on energy for milking, processing, and transportation, has also been significantly impacted. Milk prices rose sharply after the Ukraine invasion, but have since eased due to global oversupply. However, dairy farmers are receiving 25% less for each litre of milk, leading to significant losses. The ONS data reveals that factory gate prices rose by 7.7% in the year to April, significantly outpacing inflation. This increase in raw material and energy costs, coupled with changes to packaging regulations, has created a ‘perfect storm’ for producers. AJ Bell head of financial analysis Danni Hewson explains that contracts between producers and supermarkets are signed in advance, limiting the ability of farmers to renegotiate prices mid-contract. "Without a crystal ball nobody can know what is going to happen" to producers’ and farmers’ costs at the moment these contracts are signed. "So there will be a degree of some of these price increases, obviously, having to be swallowed by some of these producers," she says. The rise in bread prices mirrors this trend, with wheat prices rising after the Ukraine invasion. While these figures have leveled out, ongoing conflict in the Middle East continues to spark global supply fears. "
Key points
- Avian flu significantly reduced egg production, driving up prices.
- Energy price hikes, linked to the Ukraine war and Middle East conflict, increased production costs for all food items.
- Global supply chain disruptions, particularly the impact on grain supplies, have contributed to rising prices.
- Producers face challenges in passing on increased costs due to pre-existing contracts with supermarkets.
- Demand for high-protein diets continues to drive up the price of eggs.
