PB&J

Rising prices, inflation, and pricier peanut butter... through the lens of P&G's earnings

Wednesday, April 21, 2021 by Robinhood Snacks | Disclosures
_When inflation hits the PB jar [Enes Evren/E+ via Getty Images]_

When inflation hits the PB jar [Enes Evren/E+ via Getty Images]

Charmin, Tide, Gillette, Swiffer... Your pandemic grocery list = Procter & Gamble's pandemic winners list. In October, the consumer packaged goods giant dropped its largest quarterly sales increase in 15 years (thanks to obsessive sanitizing). Last quarter, sales jumped 5% — the slowest increase in three years. But the headliner from P&G's earnings was price hikes.

  • P&G will raise prices for some household staples, from Pampers to Tampax. Expect 5% to 9% hikes in September. It cited rising costs for raw materials and transportation.

Your PB&J is getting pricier... P&G isn't the only consumer giant hiking prices — we're seeing the first widespread increases since 2018. As supply chain shortages and inflation raise prices, CPG giants are passing on the costs to consumers.

  • Kimberly-Clark, which makes Huggies and Scott TP, plans to broadly raise prices in North America to offset higher raw materials cost.
  • General Mills (think: Cheerios, Cocoa Puffs) will raise prices to offset rising commodity and production costs.
  • Hormel Foods raised prices of its Jennie-O turkey products in February to counter soaring grain costs. It upped Skippy peanut butter.
  • Smucker hiked up Jif peanut butter (PB can't catch a break), and might do the same with pet snacks.
THE TAKEAWAY

Prices are fueling inflation concerns... but they may be overblown. People are worried that the purchasing power of the dollar could decrease, and prices could rise. Trillions of $$$ have been pumped into the economy over the past year, boosting spending (and sometimes, prices). As "revenge spending" soared in March, consumer prices jumped 2.6% from 2020 — the largest rise since August 2018. But Fed Chairman Jerome Powell said that one-time price increases will likely have only short-term effects on inflation (which has been hovering at a tame ~2% since 2008). While we're seeing prices rise faster in some sectors, like food, the Fed expects overall inflation to stay in check.