The only way is up: Corporate chiefs warn on prices
For central bankers wrestling with the question of whether inflationary pressures are transitory, industry chiefs around the world have a clear message: prices are only going higher.
Shortages of workers, fuel, cargo ships, semiconductors and building materials as the global economy bounces back after pandemic lockdowns have companies from electric car makers to chocolatiers scrambling to keep a lid on costs.
Some of the world’s biggest brands are now passing on higher prices to consumers and are warning any policymakers sitting on the inflationary fence that things are going to get worse.
“We expect inflation to be higher next year than this year,” said Graeme Pitkethly, finance chief at Unilever, which says its products, from Dove soap to Ben & Jerry’s ice cream to Persil washing powder, are used by 2.5 billion people every day.
Unilever raised prices 4.1 per cent in the third quarter and said they would go up again by at least that in the final three months of 2021, and might accelerate even more next year.
Earlier this week, the world’s biggest food maker, Nestle, said it would increase the prices of its products, which include Nescafe and Purina pet food, further in 2021 and then again in 2022 as raw material costs carry on climbing.
A long-running survey showed British manufacturers raised prices by the most since 1980 in the three months to October to cope with surging costs and labour shortages — and their cost expectations for the coming quarter were the highest since 1977.
The view from the boardroom contrasts with a more ambivalent tone among finance ministers and central bank governors faced with trying to work out when to start withdrawing monetary and fiscal stimulus without choking off the economic recovery.
A draft communique ahead of a gathering of top policymakers in Washington last week called on central banks to be ready to take “decisive actions to maintain price stability”. But by the end of the meeting, the language had been toned down.