Unilever hikes prices as inflationary pressures bite

No comments

Unilever has hiked prices and warned of further inflationary pressure next year amid rising costs for energy and raw materials.

The FMCG giant, which owns brands including Marmite, Dove, Lynx and Ben & Jerry’s, has pushed up prices 4.1% during the past three months – the steepest increase since 2012.

Unilever chief executive Alan Jope said the sector was facing a “once-in-a-two-decade inflationary scenario”, while finance boss Graeme Pitkethly warned that such pressures could mount further. He told The Guardian: “We expect inflation could be higher next year.”

The warning came in the same week that Nestlé admitted it had increased its prices by 2.1% to offset rising costs across its operations.

Jope told The Times that increasing overheads were hitting all areas of the Unilever business, including labour, energy, transport and raw ingredients.

He said the cost of palm oil, used in its Dove products, had rocketed 82% in the past two years as a result of shortages in Indonesia, while soya bean oil – used in Hellmann’s mayonnaise – has surged two-thirds as a result of poor crop production in Brazil.

Supermarkets will be reluctant to pass those additional costs on to consumers, particularly in the midst of a cost-of-living squeeze.

Unilever became embroiled in an infamous spat with Tesco back in 2016 after attempting to increase the cost of Marmite.

Pitkethly said it was having “product-by-product” conversations with retailers across Europe to map out the rising costs of its ingredients and the implications.

In its third-quarter trading update, Unilever posted underlying sales growth of 2.5%, ahead of analysts’ expectations, as price rises offset a 1.5% fall in sales volumes. The FTSE 100 company also insisted it would meet its full-year margin expectations.