Crashing egg prices signal the Fed is winning its war against inflation

• US egg prices have plunged 32% from their January peak, suggesting the Fed is winning its inflation battle.
• The average cost of a dozen eggs is $3.27, down from $4.82 at the start of 2023.
• "These retail price declines should continue with wholesale egg prices crashing, now down over 80% from their January high," Charlie Bilello said.

US egg prices are crashing, suggesting the Federal Reserve is winning its war against inflation.

The average cost of a dozen eggs has fallen 32% from its peak in January, from $4.82 to $3.27, according to the Bureau of Labor Statistics.

"These retail price declines should continue with wholesale egg prices crashing, now down over 80% from their January high," Charlie Bilello, chief market strategist at Creative Planning, tweeted on Wednesday.

Americans have been battling an egg-price crisis over the past year due to soaring inflation and a bird flu outbreak. Those factors helped drive the average cost of a dozen eggs up nearly 60% last year.

However, as inflation rapidly cools thanks to the Fed's aggressive interest-rate hike campaign, egg prices appear to be falling back down to earth.

The latest data shows inflation eased in April, with prices rising 4.9% on an annualized basis. That was the slowest rate since May 2021 and below expectations of a 5% increase.

The Fed hiked interest rates for the 10th time last week, and has now lifted rates from nearly zero to upwards of 5% over the past 14 months or so.

Fed Chair Jerome Powell has pledged to bring inflation down to the central bank's 2% target "because we know in the longer run that that is the thing that will most benefit the people we serve," he said recently.

As inflation appears to be waning, odds that the Fed will pause its rate-hike regime have risen to 92.1% among traders, according to the CME FedWatch tool.