Inflation "Black Swan" Looms as Food, Goods, and Base Metals Prices Surge Amid Further Tariff Concerns

The U.S. is facing a broad surge in prices, from food and everyday goods to base metals, putting additional pressure on Wednesday's CPI report and future price stability, making the Fed's monetary policy increasingly unpredictable.

On Friday, average wholesale prices for large, white-shell eggs reached $8 per dozen, surpassing the previous all-time high of $5.46 per dozen in December 2022.

Retailers such as Trader Joe's and Costco have imposed purchase limits on consumers due to the soaring prices.

This price spike is primarily driven by the ongoing avian flu outbreak in the U.S. and sustained consumer demand. However, this trend is unlikely to reverse in the short term, as consumers paid an average of $4.15 per dozen for large, grade A eggs at the retail level in December, signaling further pain for consumers due to rising wholesale prices.

More than 40 million egg-laying chickens died in 2024—approximately 13% of the national total—according to Amy Smith, Vice President of Advanced Economic Solutions Commodities. Shell egg inventories are roughly 15% to 16% below the five-year average.

In addition to these pressures, President Trump's global trade war has contributed to higher commodity prices as tariffs take effect gradually.

While the President delayed the imposition of a 25% tariff on all goods from Mexico and Canada, the additional 10% tariff on Chinese imports is already in place. In December 2024, China's total exports to the U.S. reached $48.83 billion, or $586 billion on an annual basis.

Moreover, on Monday, Trump declared a 25% tariff on all aluminum and steel imports, exacerbating inflationary pressures.

These tariff risks are set to further complicate the Fed's actions. Last Friday's better-than-expected 4% unemployment rate coupled with persistent inflation and trade turmoil suggests that Fed Chair Jerome Powell's upcoming testimony before Congress on Tuesday will be pivotal in outlining the central bank's next steps.