The KitKat-maker Nestlé and the Dettol manufacturer Reckitt have both indicated they will pass on rising costs in the form of higher prices this year, adding to the cost of living crisis facing consumers.
Nestlé, which also makes Nespresso coffee pods, Häagen-Dazs ice-cream and Purina pet food, increased its prices throughout 2021, and by the final three months of the year they were 3.1% higher.
The Swiss food group said it expected its costs to increase further this year and it intended to protect its profit margins by passing some of this extra expense to consumers.
“It is a safe assumption that our input cost increases for 2022 will be higher than 2021, that is something that we have to reflect in our pricing,” said Mark Schneider, its chief executive, on Thursday. “There is almost no place in the company that is exempt of inflation now … Some of these things you can hedge against, some not.”
Nestlé reported 7.5% organic growth for 2021, which was higher than forecast, and included 2% growth arising from price increases.
Meanwhile, the consumer goods company Reckitt, the maker of brands such as Harpic, Nurofen and Strepsils, said on Thursday that its costs increased on average by 11% during 2021. It predicted these would climb even higher this year.
The Berkshire-based firm, which was formerly known as Reckitt Benckiser, said it was absorbing some of its rising costs, but was increasing prices of some of its products.
“We are passing some pricing on to consumers, but we minimise that through programmes that we have internally, such as productivity programmes,” said Jeff Carr, its chief financial officer. “Prices have gone up but we’re absorbing a significant part of that inflation, and we’re not passing it on to consumers. We want to get good offers to our consumers, we want to be competitive.”
Reckitt said it was seeing “across the board” increases in the price of raw materials, especially those related to crude oil such as plastics, as well as tinplate – used for making tin cans – and dairy products.
The two companies are the latest in a long line to announce price rises as the UK struggles with a cost of living crisis. The inflation rate hit 5.5% in January, the highest annual jump in the cost of living in almost 30 years.
Britain’s households are suffering from a squeeze on their earnings, as the price of goods and services – from food to energy bills to TV and broadband contracts – rises.
According to official figures, more than three-quarters of UK adults (76%) reported that their cost of living had increased over the past month, a rise of seven percentage points from late January.
The Office for National Statistics (ONS) said increasing food shop prices was the most-frequently reported reason for the cost of living crunch (90%), followed by rising energy bills (77%) and increases in the price of fuel (69%).