With the inflation crisis expected to persist well into 2022, multiple large retailers have already announced their plans to raise their prices next year.
Earlier this month, Mondelez CEO Dirk Van de Put said that the company's most popular products like Oreo cookies, Ritz crackers and Sour Patch Kids will be more expensive next year. "We, at the moment, are looking at starting off 2022 with a seven percent increase in the U.S.," he said during an interview.
Van de Put blamed the price increase on inflation. The company is already expecting to see its operating costs next year jump by six percent due to transportation shortages and higher commodity prices. To keep the company's profit margins intact, Mondelez executives agreed on a seven percent price increase.
This announcement was followed by similar statements released by General Mills, Tyson Foods, Kraft Heinz and Procter & Gamble. All these companies are planning to hike their prices beginning next year. (Related: Tyson Foods announces 30%+ price hike for beef and pork as food inflation explodes.)
General Mills' price increase will take effect in mid-January. It will affect hundreds of items across dozens of brands, including Fruit Roll-Ups, Betty Crocker, Cheerios, Cinnamon Toast Crunch, Lucky Charms, Reese's Puffs, Trix and more. The prices for some items are expected to increase by as much as 20 percent.
The company said the price increases are a response to higher materials and labor costs.
"The current operating environment is as dynamic as we've experienced in at least a decade, resulting in significant input cost inflation, labor shortages and challenges servicing the business," said General Mills in a statement.
Prices of non-f00d products also expected to increase
The prices of non-food products are also expected to increase. Paper products company Kimberly-Clark announced future price increases to mitigate the increase in operating costs caused by "significant inflation."
"We expect to fully offset inflation with both pricing and cost reductions," said CEO Michael Hsu. "Margin improvement is a fundamental pillar of what we need to do for the company."
Swedish furniture company IKEA also announced that it was raising prices next year. According to the company's financial summary for the fiscal year 2021, the company has struggled to keep its warehouses and stores fully stocked amid the "steep increase" in the costs of raw materials, transportation and labor.
The financial summary noted that the company had to shell out an additional 250 million euros ($280.4 million) just to mitigate the added costs the company incurred due to supply chain disruptions.
"As many other retailers, we have challenges with availability and supply, impacted by the global shipping disruptions. We are continuously working to improve the availability of our products," said an IKEA spokesperson. "We have and we will put a lot of effort to keep our prices as stable as we possibly can – yet it's hard to predict how the global disturbances might impact in the coming months."
Not even discount retailers are safe from price increases. Dollar Tree recently announced that it will raise its prices from $1 to $1.25 on the majority of its products in all stores.
Dollar Tree has kept its prices stable throughout the Wuhan coronavirus (COVID-19) pandemic and the early months of the supply chain and inflation crises. But company executives said it needs to move away from its current business model if it wants to stay afloat and continue providing cheap products for consumers.
"Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers' experience and unlock value for our stakeholders," said President and CEO Michael Witynski.
Dollar Tree surveyed its shoppers and found that almost all of them will continue shopping at Dollar Tree despite the price increase.
"Ninety-one percent of those surveyed indicated they would shop Dollar Tree with the same or increased frequency," wrote the company in its financial summary report for the third quarter. "Many have also indicated they are seeing price increases across the market and that Dollar Tree is still providing the products they need at an undeniable value."
Learn more about how the inflation crisis is affecting the cost of living in the United States at Bubble.news.
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