• The San Juan Daily Star

Consumer goods prices rise as manufacturers grapple with higher costs

By Coral Murphy Marcos

Consumers are feeling the strain on their wallets as they pay more on their weekly grocery shopping trips.

Prices for staples such as milk, coffee and shampoo are on the rise, and the multinational conglomerates that produce them, such as Danone, Nestlé and Procter & Gamble, are blaming the increases on higher costs caused by pandemic-related supply chain disruptions.

The higher bill at checkout comes as overall consumer prices have jumped sharply in 2021, climbing 5.4% in September from the prior year. Food and furniture costs surged, and Federal Reserve officials have signaled that if inflation remains elevated, the central bank may need to act to ensure that the price increases do not become permanent.

Other companies are likely to follow suit in raising their prices as inflationary pressures continue, said Laura Veldkamp, professor of finance at Columbia University’s Graduate School of Business in New York.

The demand for some products eased during the pandemic, “but now we’re getting back to the business of shopping,” Veldkamp said. “The fact that companies are raising prices is a normal course of events.”

On Wednesday, Nestlé became the latest consumer products maker to say that consumers should expect price increases in the coming months. In its quarterly financial performance report, Nestlé attributed the rising costs to supply chain constraints. “We do expect to have higher input-cost inflation,” François-Xavier Roger, the company’s chief financial officer, said on a conference call.

The company’s dairy products, such as Carnation milk and Dreyer’s ice cream, and pet care products, such as Purina pet food and cat litter, have been among the items most affected by higher costs in 2021. Nestlé, the maker of Nescafé and Starbucks Coffee at Home, also said it expected higher coffee prices in 2022.

Nestlé’s grim report followed a similar one from Procter & Gamble, which said Tuesday that it was experiencing higher costs for commodities, transportation and freight. “We will offset a portion of these higher costs with price increases,” Andre Schulten, P&G’s chief financial officer, said on a conference call. “As this pricing reaches store shelves, we will be slowly monitoring consumption trends.”

He added that consumers should expect higher prices for grooming, oral and hair care products from P&G, whose brands include Gillette, Olay, Oral-B and Pantene.

Danone, the maker of Silk milks and Evian water, also anticipated price surges for the rest of the year. “What started as increased inflation on material costs evolved into widespread constraints impacting our supply chain in many parts of the world,” the company said in its quarterly earnings report Tuesday.

Companies have also said labor shortages were slowing operations at warehouses and distribution centers, which have reported some workers out sick with COVID-19, and others out to quarantine. The supply chain woes come before the holiday season, with major ports facing a staggering pileup of cargo that shows no signs of relenting.

Unilever, the maker of Ben & Jerry’s, Lipton and Dove, is set to publish its third-quarter earnings report Thursday as investors look for signs of continuing price increases.

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