Get ready for an even higher grocery bill: Procter & Gamble says it’s going to hike prices even further on consumer favorites like Tide laundry detergent.
And that comes on top of price increases it had already implemented as the company that makes Oral-B, Bounty and Nyquil says it’s facing its own rising costs — with inflation nationally stuck at 40-year highs.
The price increases are slated to take effect at the end of February — but that won’t be all. P&G said Wednesday that another price increase will come in April for its personal-health products.
Consumers so far haven’t resisted the price increases, P&G says: They’re still stocking up on household goods, even as they take a greater and greater share of the family budget.
The upcoming increase on such products as Tide detergent and Downy dryer sheets are on top of increases the company implemented last year on 10 other products, including baby and feminine care, adult incontinence, hair and grooming products.
On an earnings call Wednesday, Procter & Gamble said it would spend $2.8 billion more on commodity, freight and foreign-exchange costs in this fiscal year — about $500 million more than it forecast last quarter.
Meanwhile, consumers still are buying: Procter & Gamble turned in sales and profit growth that beat Wall Street’s expectations, increasing 6% to $21 billion and 13% respectively in the quarter ended Dec. 31.
Half of the company’s sales growth came from price increases while the other half was due to higher volumes of items sold, the company said.
“Demand has continued to be strong,” Chief Executive Jon Moeller told CNBC’s Squawk Box on Wednesday. “What we see at the store is encouraging,” though not surprising considering that the “the products we offer are relevant as people spend more time at home, more meals at home.”
The growth occurred during inflation’s fastest rate of growth in four decades, driving up Procter & Gamble’s prices by 3% on average.
Moeller also said that consumers are buying premium products as evidenced by Procter & Gamble’s private label brands, which did not grow in the quarter.
Sales of healthcare and cleaning brands grew the most at 8% each, fueled by respiratory products like Vicks and NyQuil – because of a potent cold and flu season – and fabric care products.
Grooming products, which include Venus and Gillette shaving brands, grew by 5% as did sales of baby and family brands, including Pampers and Charmin toilet paper, the company said.
Sales of Procter & Gamble’s beauty products, including shampoos Herbal Essences, Pantene and Old Spice, rose by just 2%.
The company is now raising its forecast for 2022, including sales growth of between 3% and 4% for 2022 up from its previous estimate of 2% to 4%, but it’s not expecting higher earnings due to inflationary pressures.
Moeller also warned that the company does expect some consumer pushback.
“There will be bumps in the road,” he told Squawk Box. “There will be cases where we take pricing, and we either encounter the consumer reaction that some of you are rightly looking to or a competitive reaction.”
Procter & Gamble’s shares were up nearly 4% to more than $163 on Wednesday.
