Nestle warns of more price rises as inflation hikes costs
FOOD giant Nestle will raise its prices again to offset soaring inflation, having already hiked them 5.2 per cent this year.
Nestle, which counts Kit Kat, Smarties, Haagen-Dazs, Nescafe and Purina pet food among its brands, is the latest multinational to warn that prices will have to go up in response to higher labour, fuel, energy and transport costs.
Chief executive Mark Schneider said: “We stepped up pricing in a responsible manner and saw sustained consumer demand.
“Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the year.” Pet owners were hit the hardest by increases, with prices for products from Nestle brands such as Felix and Purina soaring 7.7 per cent.
Bottled waters such as Perrier and Sanpellegrino saw the second biggest hike, with increases of 7.2 per cent.
People buying from Nestle’s ingredients and pre-prepared foods businesses, which include Nescafe, Maggi, Buitoni and Herta, paid 6.4 per cent more.
Fans of iconic chocolates such as Kit Kat, Milky Bar, Aero and Quality Street were forced to pay 3 per cent more for their favourite treats. According to consultant GlobalData, six out of 10 consumers are either extremely worried or concerned about their finances. It expects that figure to rise as more incomes are squeezed by inflation.
Consumer analyst Amira FreyerElgendy said Nestle will have to tread carefully as consumers will look to save money by switching to cheaper labels.
She said: “The interest in premium products is likely to dissipate over 2022, as mounting price hikes and living costs squeeze consumer budgets.
“Nestle must closely track consumer sentiment and monitor the level of trading down to protect its performance if its premium brands suffer from abandonment.”
Hargreaves Lansdown equity analyst Matt Britzman said: “Hiking prices to keep things moving in the right direction in the wake of input cost inflation won’t be a course of action management want to have to take.
“But it’s the position Nestle finds itself in and it doesn’t look likely to go away anytime soon.”