Nestlé expects further price hikes as inflation rises Business News

Nestlé has warned that more price hikes could be on the horizon as it battles high cost inflation.

The maker of KitKat and Shreddies said it had already raised prices by more than 5% in the first three months of 2022, but was considering further increases.

Mark Schneider, chief executive of the Swiss food group, said: “Cost inflation continues to rise sharply, which will require further pricing and mitigation measures during the year.”

Nestlé has seen sustained customer demand despite rising prices, Mr Schneider added.

The group recorded a 7.6% increase in organic sales in the three months to March, driven by a 5.2% increase in prices and a 2.4% increase in volumes.

He revealed that prices jumped the most in North America, which saw an 8.5% increase, while European buyers saw an average increase of 4.1%.

Meanwhile, the owner of Purina revealed that its pet care products saw the biggest price increases, rising an average of 7.7% in the first quarter.

The company said it expects overall sales to increase by 2022 or so this year, despite the potential for further inflationary headwinds amid the war in Ukraine.

Mr. Schneider said: “During these first months of the year, the war in Ukraine has caused untold human suffering.

“We remain focused on supporting our colleagues there and providing humanitarian aid, while standing with the international community in the call for peace.”

Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Rising prices to keep things in the right direction following input cost inflation is certainly not going to be a course management will want to take.

“But that is nonetheless the position Nestlé finds itself in and doesn’t look likely to go away any time soon, adding pressure to the group’s volume-focused strategy.

“So far, volumes have still been able to move in the right direction, helped by the recovery of out-of-home channels which saw demand fall while restrictions were in place last year.”