Shoppers to face fresh price hikes as stores, suppliers pass on costs

  • Grocery costs seen rising further in 2023 -executives, analysts
  • Input costs exacerbated by Ukraine war
  • Retailers seeking to pass on high raw material costs
  • Unilever, Nestle, Danone to report results this month
  • Cost inflation likely to be a feature – analysts

LONDON, Feb 8 (Reuters) – Shoppers around the world will pay even more for groceries this year than they did in 2022, according to retailers, consumer goods firms and investors, unless commodity costs decline or the shift to cheaper store-brand products accelerates.

Retailers and consumer goods producers have been stuck in tough price negotiations for more than a year now, with friction beginning in 2021 over COVID-related supply chain logjams.

This has since ballooned into fights over the high cost of raw materials and energy in the wake of Russia’s invasion of Ukraine, with rising prices of basic foodstuffs from bread to milk and meat exacerbating a cost-of-living crisis in Europe.

Britons paid a record 16.7% more for food in the four weeks to Jan. 22 compared to the same period last year, according to research firm Kantar. The U.S. food index, including meals eaten at home and in cafes and restaurants, increased 10.4% for the year ended in December.

Mark Schneider, CEO of the world’s biggest food group Nestle, last week told a German newspaper it would have to raise prices of its food products further this year to offset higher production costs that it has yet to fully pass on to consumers.

“Investors will pay a premium for companies that exhibit pricing power in their portfolio without adversely impacting volumes and market share,” Jack Martin, a fund manager at Oberon Investments, said.

Big, packaged-goods companies’ margins have been squeezed by higher input costs for over a year as the price of ingredients like wheat and sunflower

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