Consumer sentiment significantly influences economic activity, and the price trends of specific goods can disproportionately affect consumer inflation views. Recently, the prices of orange juice and eggs have led some consumers to recall periods of high inflation. However, based on recent price trends, consumer sentiment may be improving.
The graph on the left illustrates that orange juice prices have dropped nearly 50% over the last few months. The citrus greening disease affecting Florida’s orange crop appears to be under control, and there is increased supply as Florida recovers from two strong hurricanes in the past two years. Additionally, egg prices have started to decline, with the cost of a dozen eggs now at $5, significantly lower than weeks ago. The impact of the avian flu is diminishing.
While the decline in orange juice and egg prices will have little effect on inflation data, it may enhance consumer outlooks on prices, thereby boosting consumer sentiment.
— news from Real Investment Advice