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Global consumer price surge hits workers
Over the last week leading businesses, banks and financial analysts have released estimates predicting that global consumer prices, whether toilet paper, electronics, or food, have and will continue to rise substantially in 2021.
Tents of the homeless on the sidewalk in Skid Row, Los Angeles, 2018 (Photo: Wikipedia/Russ Allison Loar)
Already in the United States, the Consumer Price Index, a measure of average prices, increased by 0.6 percent in March, the largest monthly increase since August 2012. In the UK, prices increased by 0.7 percent in the same month.
At the Berkshire Hathaway annual shareholder meeting this past weekend, billionaire Warren Buffett said, “We are seeing substantial inflation. We are raising prices. People are raising prices to us, and it’s being accepted.” He described the economy as “red hot.”
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Heinz tomato ketchup is show on display during a preview of a new Walmart Super Center prior to its opening in Compton, California, U.S., January 10, 2017. REUTERS/Mike Blake
Kraft Heinz Co (KHC.O) beat first-quarter revenue and profit estimates on Thursday as a year-long surge in demand for consumables including Lunchables crackers and Kraft Macaroni & Cheese held up even as the U.S. economy gradually reopened.
Shares rose 3% in noon trading after the company projected current-quarter organic net sales to rise by mid-single-digits.
Pandemic-induced curbs that led people to eat at home and rely on packaged meals proved to be a boon for the Chicago-based company, which has struggled with tepid sales and was forced to write down the value of several brands by billions of dollars over the past two years.
Kraft Heinz executives are confident they can manage anticipated inflation in the mid-single digit range across the portfolio this year by leveraging new product innovation and renovation, a quality over quantity approach to marketing and promotions, and ongoing cost savings initiatives, including SKU rationalization.
The company also may be better positioned than some for managing inflation because it has slowly increased pricing over the past year, which has contributed positively to its net sales in seven of the last eight quarters, US Zone President Carlos Abrams-Rivera told investors during the company’s first quarter call April 29.
“I feel good about our ability to deal with the inflation that we have and making sure we do this in a way that is positive for the company,” he said, noting much of it can be passed through to consumers.