For some commodities, starting next year, prices will increase by about 20%.
The wholesaler shared General Mills’ letters with CNN Business anonymously to protect the company’s relationship with its suppliers. A person in charge of the company said it plans to drive all the growth of its grocery and convenience store customers. He wants them to then pass them on to shoppers.
A spokesperson for General Mills did not comment on this story.
If more General Mills customers—including the leading large stores, supermarkets, pharmacies, and other chains in the United States—decide to do so, then these familiar brands will become more expensive for shoppers.
Grocery prices stagnated from 2015 to 2019, and rose sharply during the pandemic. According to the latest data from the US Bureau of Labor Statistics, prices in October rose 1% from September and 5.4% from the same period last year.
The market research company IRI predicts that the inflation rate of food, beverages and household basic necessities will climb to 8% in the first half of 2022, and then stabilize at 4% in the second half of the year. IRI tracks price, point of sale and quantity data, promotions and trends in large stores, wholesale clubs, supermarkets, pharmacies, and other consumer channels.
During the pandemic, food manufacturers and grocery chains face higher costs in terms of merchandise, labor, transportation, and other expenses. In recent months, these costs have continued to rise, prompting them to increase prices to minimize the impact.
The producer price index, which measures the prices of manufacturers’ goods and services, rose 0.6% last month from September, with an average annual increase of 8.6%.
General Mills said in the letter that it is dealing with higher material and labor costs.
General Mills said: “The current operating environment is as vibrant as we have experienced for at least a decade, leading to significant increases in input costs, labor shortages, and the challenges of serving the enterprise.”
General Mills said in September that it expects an input cost inflation rate of 7% to 8% for the 2022 fiscal year.
“Inflation is more painful for low-income households,” Bank of America economists said in a research report last week. This is because they have easier access to the fastest-rising commodities, such as gasoline and rent, and they save less compared to high-income groups.
Some grocery chains are increasing prices faster than their competitors, depending on their flexibility in handling higher costs.
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