Unilever Warns Of Hiking Pricing Amid Rising Cost Of Production

Makers of consumer goods around the world have been raising prices to make up for soaring energy, labor, transportation and commodities costs, with the Ukraine conflict exacerbating inflationary pressures already building in the recovery from the Covid-19 pandemic.

Unilever warned that its prices are expected to rise further, increasing its forecast for cost inflation in the second half of the year to 2.7 billion euros ($2.8 billion) due to the increase in raw material inflation. The company had previously forecast 1.5 billion euros of cost inflation in the second half but greatly exceeded it.

According to Barclays analyst Warren Ackerman , “Their (full-year) costs are going to quadruple versus a year ago. That’s why the pricing needs to be so high, and that’s why the price is going to go much higher,” said. “This is not the peak.”

The company hiked prices the most in Latin America – by 16.4% – and emerging markets, followed by North America, where prices increased by 8.5%.       

It now expects full-year underlying sales growth to be towards the top end of its 4.5-6.5% guidance range, but the full-year underlying operating margin towards the bottom end of its 16-17% range.

Rivals Procter & Gamble (P&G) and Nestle have also reported strong sales growth in recent days after lifting prices, but some analysts say it is likely that consumers increasingly switch to cheaper own-brand products as their incomes are squeezed.