Giant consumer firms weigh whether to increase prices again         

Once-in-a-generation levels of inflation, stemming from pandemic supply chain snarls and the Ukraine war, have hit shoppers globally.

Prices of everyday basics like Bounty paper towels and Cadbury chocolate may rise again this year while those of others like Clorox wipes and Diet Pepsi are likely to stay steady, as manufacturers make differing bets on the strength of the consumer and their brands.

Consumer goods makers' strategies on further price hikes depends on their leverage with big retailers, who are pushing back against more increases, how much consumers need and want the items and their arrangements for buying volatile commodities, some of which are falling in price.

Once-in-a-generation levels of inflation, stemming from pandemic supply chain snarls and the Ukraine war, have hit shoppers globally.

In Britain, consumers paid 16.7% more for food in the month to January 22 compared to the same period last year, while US prices for food eaten at and away from home rose over 10% in the 12 months to the end of January.

But, there are small signs the pressure is easing, with US consumer prices a month earlier declining for the first time in two-and-a-half years, due in part to gas prices.

As the "tide is turning a little bit", some retailers are also now asking suppliers for "rollbacks" as the cost of fuel, for example, falls, another factor driving companies' decisions, said KPMG consultant Sunder Ramakrishnan. 

"The retailer would drop the shelf price, because manufacturers agree to sell it for less to the retailer," Mr Ramakrishnan said.

The cost of cardboard cases has decreased by as much as 50%, and transportation costs have plummeted as well, by 25% to 30%. Some plastics and chemicals used in household goods have risen, executives have said, and staff costs have risen. 

After more than a year of consistent price hikes, some consumer goods makers such as Kraft-Heinz are pressing pause as they weigh consumer demand for their items.

But other companies like Nestle, the world's biggest food company, continue to plan price hikes in the future to recoup margins squeezed by staff and fuel costs. 

Price, always a major factor for consumers along with quality, is now becoming even more important, said Mark Hosbein, an executive at consulting firm Magid. 

Coca-Cola chief executive James Quincey said last week the company had "earned the right" to push prices on to consumers because its classic Coke and Fanta sodas lead the beverage category.

Executives at Procter & Gamble said the company was confident the US "consumer is going to hold up well" over the next few quarters, and planning more increases. 

The average prices consumers are paying for Kraft-Heinz and PepsiCo products have risen faster than Nestle's, another reason why both Kraft-Heinz and PepsiCo may be holding off on hikes for now. 

Reuters