The company, which owns brands like Crest, Tide and Gillette, announced that many of its prices are going to go up in the weeks to come due to the elevated costs of raw materials.
Procter & Gamble's Chief Financial Officer, Andre Schulten, said: “We do not anticipate any easing of costs. We continue to see increases week after week, though at a slower pace.”
Some of the categories of goods in which the company has warned retailers of upcoming price hikes include skin care, oral care and grooming products. This comes on the heels of price increases in product categories such as fabric care and home care. Household goods companies such as Kimberly Clark and Colgate Palmolive have also announced price increases this year, and they are joined by General Mills, Coca Cola and PepsiCo.
Unfortunately, the prices of many of P&G's goods are already quite high, with the company announcing back in April that many paper products would start to cost more money, including essential goods such as paper towels, diapers and tampons.
The company is expecting to spend $2.1 billion more on raw materials and transportation. According to Schulten, they are already paying more for pulp, resin, packaging and other raw materials, and this is coming at a time when the company is also contending with truck driver shortages and climbing costs of diesel fuel. He said that he does not expect commodity cost pressures to ease.
Although Procter & Gamble did benefit from resurgent demand in their personal hygiene products when consumers returned to work and social gatherings as COVID-19 lockdowns eased, it will still be necessary to raise prices to soften the blow of the increasing production costs.
According to the Wall Street Journal, U.S. inflation has now hit its highest level in 13 years thanks to big price surges in the basic materials used to produce goods, with everything from lumber and copper to oil and wheat seeing noteworthy price rises.
Current inflation is unlikely to ease up any time soon
Unfortunately, the situation does not appear poised to let up any time soon, with Treasury Secretary Janet Yellen warning that the current inflation is likely to stick around.
In an interview with CNBC, she stated: “Supply bottlenecks have developed that have caused inflation. I believe that they’re transitory, but that doesn’t mean they’ll go away over the next several months.”
Other economists, however, have taken issue with using the term "transitory" to describe the situation. The Senior Vice President of Research and Chief Economist for the Mortgage Bankers Association, Mike Fratantoni, said that he believes the high inflation we are seeing right now is not entirely transitory, and he predicts that housing costs are going to continue to rise even after some of the inflation tied to supply chain constraints eases.
According to a report from Moody's Analytics, the inflation we are seeing right now is costing the average American family an extra $175 per month on the basic necessities of housing, fuel and food. Meanwhile, the number of American households who say that it is now “very difficult” to cover their usual expenses has risen by 8 percent since early August to reach 26.5 million.
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