Inflation: Procter & Gamble prepares more increases to items to protect its profit margin
In the middle of the inflationary wave Procter & Gamble raises its hand and says on its earnings call that it will be raising prices on more of its portfolio to protect its profit margin. as commodity and freight costs rise.
CNBC reported that the consumer giant has already informed retailers about the price increases on fabric care products like Tide detergent and Downy fabric softenerand which will take effect on February 28, while personal care products will have higher prices in mid-April.
P&G has already raised its portfolio prices on the following items:
– baby care
– feminine care
– adult incontinence
– family care
– home care
– hair care
– personal care
– oral care
– skin care
And it’s not just US consumers who are paying more, as the pass-through of increases is also being passed on to prices in some of their international markets.
P&G raised its inflation forecast for the second consecutive quarterand the company expects to pay $2.3 billion after tax in raw material costs and $300 million in higher freight costs, above last quarter estimates of $2.1 billion in raw materials and $200 million in freight.
Faced with rising prices, consumers often switch to cheaper alternatives from competitors or private brands, but P&G seems confident in its pricing strategy.
It appears that consumers are willing to pay more for the brands they know rather than resort to cheaper options for toilet paper or laundry detergent.
The brand’s strategists told analysts on the earnings call that their rivals also face the same cost pressure from raw materials, but that currency headwinds hit P&G harder due to its larger international presence.
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