By Natalie DeCoste
Businesses are starting to feel the strain of higher commodity prices and are passing that burden along to consumers.
Kimberly-Clark Corp. announced that the company plans to raise prices across much of its North American consumer-products business to help counter the rising costs of raw materials.
“Kimberly-Clark Corporation (NYSE: KMB) announced today that it is notifying customers in the U.S. and Canada of plans to increase net selling prices across a majority of its North America consumer products business. The increases will be implemented almost entirely through changes in list prices and are necessary to help offset significant commodity cost inflation,” read the company’s announcement.
The company makes popular consumer products like Huggies diapers and Scott paper products. The rise in prices would be a price percentage increase in the mid to high-single digits and take effect in late June of this year.
The company first warned of commodity inflation in January. It expected the costs to rise for materials like pulp, recycled fiber, and resin leading to inflation of $450 million to $600 million in 2021. At that time, Chief Executive Michael Hsu said the company was not planning for broad-based increases to list prices.
Kimberly-Clark is rivals with Proctor & Gamble, which has yet to increase its prices. However, if P&G does follow suit, consumers would also see the cost of Pampers diapers and Charmin toilet paper start to rise.
J.M. Smucker was among the first companies to raise prices on consumer goods. The company raised the price of its Jif peanut butter in August as peanut yields fell, and its competitors followed suit.
“We only raise prices when costs are meaningfully higher, and we partner with the retailers to make sure it’s justified and that we move together,” said Smucker Chief Executive Mark Smucker.
Consumers’ Research recently hosted an event with Oren Cass, Executive Director of American Compass, addressing inflation issues in the market. The event, titled “The Persistent Thief: How Underestimating Inflation is Depriving Consumers of the American Dream,” detailed how the CPI does not tell the real story about the rising costs of achieving the American Dream.
“The core challenge with measuring inflation is discovering what counts. If you ask families what costs are concerning, they would say that healthcare is rising at 12% and college is costing $150,000 per year,” explained Cass in the event.
Consumers’ Research reported that inflation would be rising briskly over the next few months, according to BCA Research chief global strategist Peter Berezin in a Jan. 25 note to reporters. Due to the way prices dropped last spring, the price rebound seen in the past year will register as a significant increase due to inflation reported in year-over-year changes.
“People feel more comfortable making the argument that families are feeling squeezed. There hasn’t been enough work done to quantify household budgets, and this is just a starting point,” said Cass, reflecting the concerns over inflation.
