Shoppers are set to face further wounding price increases in the coming months, as some of the world’s largest consumer goods giants admit that more cost hikes will be passed on to shoppers.
Retail chiefs have warned more price increases are on the way, with the British Retail Consortium (BRC)’s Helen Dickinson admitting households and firms “must prepare for a difficult period as inflationary pressures hit home.”
Shop price annual inflation surged to 4.4 per cent this month, the highest pace since the BRC and Nielsen IQ’s shop price index started in 2005.
Butter and cooking fats were among those to mark the biggest increases, with food prices surging seven per cent amid the war in Ukraine and rising production costs.
Ben & Jerry’s owner Unilever warned yesterday that it had not yet passed on the full impact of input cost rises to consumers, after lifting prices 11 per cent in the second quarter compared to a year prior.
Underlying sales growth of 8.1 per cent was “driven by strong pricing to mitigate input cost inflation, which, as expected, had some impact on volume,” Alan Jope, chief executive officer said yesterday morning.
The consumer goods giant boosted its guidance for sales growth, “driven by price with some further pressure on volume.”
Chief financial officer Graeme Pitkethly told journalists on an investors call that the company was currently battling with a “truly unprecedented cost landscape” and the current economic challenges could tip into a recession.
Further price increases in the second half of the year were likely on the horizon, according to Alex Smith, global sector lead for consumer, at global primary research firm, Third Bridge.
“Inflation will continue to erode Unilever’s margins for the next 12-18 months although margin pressure has been partly mitigated by price increases in the first half,” he said.
Soft drinks giant Coca-Cola also admitted it had hiked its average selling prices around 12 per cent in the second quarter, according to Reuters.
Demand for fizzy drinks after the easing of Covid measures meant global sales volumes were buoyed by eight per cent.
Coca-Cola boss James Quincey acknowledged that the brand would increase prices further in markets where costs were surging, passing cost increases to consumers ahead of a possible recession.
It comes as Dairy Milk-maker Mondelez boosted its forecast for 2022 organic net revenue, predicting a boost of more than eight per cent compared with its prior estimate of more than four per cent.
“While consumers (in developed markets) express growing frustration with rising prices for a broad range of goods and services, they continue to perceive chocolate and biscuits as affordable indulgences and an important pick-me-up,” chief executive Dirk Van de Put stated on an earnings call, Reuters news agency reported.
According to NielsenIQ data, total till grocery sales in the UK were propelled by the summer weather but volumes dipped as customers cut back.
Sales were up 4.4 per cent in the four weeks to 16 July, with sales up 5.6 per cent in the last week when scorching weather started.
Price hikes meant volume sales dropped 4.1 per cent, with shoppers buying fewer groceries compared to last year.