What’s Going On Here?General Mills became the latest consumer staples giants to announce further price hikes earlier this week, so customers will have to start saving up for those daily essentials. What Does This Mean?Companies have been forking out more and more for raw materials and labor, as supply shortages and strong demand keep pushing up prices. But consumer staples companies are in a good spot: they sell products that shoppers tend to buy no matter what, so they can up their prices to protect their bottom lines without losing customers.
You don’t have to tell General Mills twice: the maker of foods like Cheerios and Fruit Roll-Ups announced earlier this week that it’ll be raising the prices of hundreds of items next month, with some reportedly set to increase by around 20%. It’ll be in good company: consumer staples companies Procter & Gamble, Kimberly Clark, Tyson Foods, and Kraft Heinz have all announced price rises starting next year too. Why Should I Care?For markets: Consumer staples are star stocks.
Consumer staples stocks have been doing well recently, with an index tracking some of the world’s biggest consumer staples companies outperforming the US stock market since the start of the month. That might just be because investors like companies that can offset rising costs by upping product prices, but it could also be a sign that nervous investors are flocking to more stable companies that do well even in economic downturns – perhaps prompted by Omicron and lessening government support.
The bigger picture: Expensive essentials.
Price rises aren’t what we need right now: UN data already showed that an index tracking global food prices hit its highest level in a decade last month. And that’s across the board: indexes tracking cereal, meat, and sugar prices were up 23%, 18%, and 40% respectively compared to this time last year. Worse yet, economists reckon this could continue, as high fertilizer costs and potential bad weather might restrict food supplies. | 