On Wednesday, Reuters reported that grocery prices will rise even higher in 2023 than they did in 2022 for consumers across the globe, citing new data from retailers, consumer goods firms, and investors.
Reuters reported that for over a year now, behind the scenes there have been fierce negotiation taking place between retailers and the producers of consumer goods, over pricing, “with friction beginning in 2021 over Covid-related supply chain logjams.”
Things only got worse in 2022 as fuel prices soared, inflation skyrocketed, and the rising costs of even basic foodstuffs set off a full-bore cost of living crisis in the EU and UK.
According to data from Kantar, a data research firm, in Britain the cost of food has risen a record 16.7% just in the four weeks to January 22nd this year, compared to the same period one year prior. At the same time, in the US, the US food index, which also factors in the costs of meals eaten at home, as well as in cafes and restaurants. showed costs of food increasing 10.4% for the year ending in December.
CEO Mark Schneider, of food titan Nestle’s, said to media outlets last week that his company would be hiking the prices of its food products this year due to higher production costs, which his company will need to pass on to consumers.
Unilever, another major consumer goods producer, is also expected to raise the prices of many of its products come 2023.
Tineke Frikkee, a portfolio manager at Waverton Investment Management, said, “The last time we heard from Unilever, it was made clear that they prefer to sell fewer products at higher prices, to keep prices below peers and gain market share.”
Walmart, the biggest retailer in the world, issued a warning in December, saying that some “packaged goods suppliers are still pointing us towards more inflation next year on top of the mid-double digits this year.”
Unfortunately, as costs rise, consumer goods manufacturers will need to raise their prices to supply those goods, while continuing to produce profits for their shareholders. He explained in an interview with Reuters, “The only thing that can stop this is … consumers starting to trade down to private-label products at a more rapid pace… (and) if commodities keep declining, then there may be no need for more price increases,”
