Consumer goods giant Proctor & Gamble as well as food aggregate Danone are planning to raise prices on their products after they reported elevated production costs amid a deepening global supply chain disruption as a growing number of container ships remain anchored off the California coast due to an offloading and distribution bottleneck.
According to P&G chief financial officer Andre Schulten, price increases are not going to be across-the-board but rather will apply to specific products like razors, the Daily Mail reported.
He added that retailers in the United States are aware of the coming price hikes.
Experts and industry analysts have been forecasting price increases for goods for some time as the supply chain crisis worsened. Also, inflationary pressures have been rising as well; consumer prices, on average, are up 5.4 percent this year as compared to last year, with the price of gas, food, and clothing rising as well.
The continuing problem of getting goods to market is one of the major factors contributing to inflation.
The Marine Exchange of Southern California said on Monday that at least 100 container ships were sitting idle off ports of Long Beach and Los Angeles, which is many times the average of 17 ships waiting to be offloaded before the COVID-19 pandemic caused global commerce shutdowns.
The Biden administration struck a deal last week with business leaders from Walmart, UPS, FedEx, and others, as well as unions, to bolster port operations in an effort to ease the bottlenecks.
“The latest price increases are in addition to the mid-to-high single-digit percentage price hikes earlier this year on P&G products including Pampers diapers and Always sanitary pads,” the Daily Mail noted, adding that the company’s expenditures of $2.3 billion this year were above the $1.9 billion it had forecast.
The company blames its higher costs on rising prices for raw materials as well as energy and diesel fuel, with officials saying they don’t expect those costs to come down in the foreseeable future.
For example, oil prices have climbed to seven-year highs in part due to increases in demand as global economies emerge from the pandemic. Republicans have blamed rising U.S. energy and fuel prices on Biden administration policies.
To that point, gas prices have skyrocketed since Biden took office, and are expected to continue rising as he ponders new regulations on energy producers, the Washington Examiner reported.
“In Manhattan, gas prices have hit nearly $5 per gallon, while more than 40 states are experiencing gas prices over $3 per gallon. GasBuddy reports the national average for gasoline is at $3.25 per gallon, well above the prices the same time last year,” the outlet reported, adding that in the last month alone, gas prices on average have risen eight cents.
“Now in a single day, American drivers are paying over $400 million more for gas than they were last year,” GasBuddy noted.
In terms of price hikes for consumer goods caused by shortages, the supply chain bottleneck in the U.S. is being made worse by a shortage of truck drivers and dockworkers.
Danone, meanwhile, which manufactures Activia yogurt and Evian bottled water, said gains in productivity and price increases will keep the company’s margins healthy.
“Like just about everyone across the sector and beyond, we see inflationary pressures across the board. What started as increased inflation on material costs evolved into widespread constraints impacting our supply chain in many parts of the world,” Danone’s finance chief, Juergen Esser, said.
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