Nestle Hikes Food Prices By 5%

Nestlé, the world's biggest food and drinks company, increased prices by more than 5% in the first quarter of 2022 as it passed on rising costs to consumers.

North American shoppers were worst affected, facing an 8.5% rise in prices. Latin America faced the second-biggest increase, at 7.7%.

At the company’s latest earnings briefing, CEO Mark Schneider signaled that more increases are on the horizon. Arguing that the company would raise prices responsibly, Nestle flagged stubborn global inflation as the key reason for the price hikes. 

Consumer price inflation is not going anywhere, despite the best efforts of central banks around the world. The US faced 8.5% inflation in March, with Europe dealing with a 7.5% average rise in prices during the same period. Russia's invasion of Ukraine has only made the situation worse, pushing up prices for such staple goods as wheat and vegetable oils.

World Bank president David Malpass warned that skyrocketing food prices risk a “human catastrophe” and said prices could rise by as much as 37% because of a combination of global factors.

What does this mean for me? 

Commentators were not being alarmist when they expressed deep concerns about how Russia’s invasion of Ukraine would affect a global economy that was already struggling to contain high inflation and elevated energy prices.

Those fears have come to pass with these latest food prices increases. On the back of this news, you can expect Nestle’s next earnings report to reveal improved gross revenues, which could have a positive effect on its share price.