Inflation was supposed to be gone. It was dangerously high in 2022. In June of that year, it rose 9.1% year over year. That was the most since 1981. Energy prices were most to blame. Yet, the Federal Reserve brought it down to 2.9% last month, very close to the central bank’s goal.
24/7 Wall St. Key Points:
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Surging egg prices are the first sign that inflation has returned.
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Threatened tariffs would boost the prices of many goods and services in the United States.
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Inflation is on the move again. The first indication of that is egg prices, though many goods and services will follow if the White House goes through with the tariffs it has threatened.
Egg prices are based on scarcity, a similar mechanism to tariffs. They rose 39% year over year in December. They have increased again this year, and the rise is expected to continue.
The reason for the egg price jump is the highly pathogenic avian influenza. It killed over 10 million egg-laying chickens in the final quarter of 2024, according to the U.S. Department of Agriculture. Farmers have not figured out a way to stop its spread.
Why Worry About “a Little Inflation”?
JPMorgan CEO Jamie Dimon said Americans should not be concerned about inflation risk in the current geopolitical climate. That is easy for him to say. He is a billionaire. He recently spoke about potential tariffs on Chinese, Canadian, and Mexican imports. “If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it.”
A “little inflation” is an understatement. China, Canada, and Mexico are America’s largest trade partners. Each sends items to the United States that are key to the economy, and particularly to America’s consumers. In terms of goods imports to America, China represents $536 billion, Mexico represents $455 billion, and Canada $427 billion. The three nations are the most likely tariff targets.
Canada and Mexico supply large numbers of cars and car parts. They also export crude oil to the United States. The number of items imported from China is nearly countless.
When inflation was at its worst in 2022, energy was one major reason. However, new and used car prices were another significant contributor.
Tariffs will make egg price inflation seem trivial.
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