Manufacturers of top food and consumer goods brands plan to raise prices in the spring, giving shoppers anticipating a sharp drop in their grocery bills.
Kraft Heinz said in a recent letter to its customers that it will raise prices in March on dozens of products including Oscar Mayer Cold Cuts, Hot Dogs, Sausage, Bacon, Velveeta Cheese, Maxwell House Coffee, TGIF Frozen Chicken Wings, Kool-Aid . And Capri drinks flax.
A three-pack of Oscar Mayer turkey bacon offers a 30% increase from 6.6% on 12 oz Velveeta Fresh Packs. Most cold cut and beef hot dogs will rise about 10% and coffee around 5%. Some Kool-Aid and Capri Sun drink packs will increase by about 20%.
“As we enter 2022, inflation will dramatically impact the economy,” Kraft Heinz said in a letter dated January 24 to at least one of his wholesale customers, which was seen by CNN Business. The wholesaler shared the letter on condition of anonymity to protect the company’s relationship with its suppliers.
Kraft Heinz is the latest consumer maker to announce plans to boost prices at the start of the year. Last week, Procter & Gamble said it was increasing prices on Tide & Gain laundry detergent, Downy fabric softener and Bounce dryer sheets for its retail customers by an average of about 8% in February. Conagra, which makes brands such as Slim Jim, Marie Callenders and Bird’s Eye, recently said it would raise prices later this year as well.
If retailers decide to pass on any increased costs, these items will be more expensive for shoppers in stores. US consumer prices rose 7% annually in December, the sharpest climb in 39 years.
Kraft Heinz has already raised the prices of some of these foods in recent months.
In October, the company said it would increase prices on Oscar Mayer cold cuts and hot dogs. In November, it said prices of Oscar Mayer beef, lean beef and Angus hot dogs, cheese dogs and other products would rise by about 9%.
But since the hike in November, Kraft Heinz said in the letter, it has faced “disrupted supplies, logistics constraints and weather-induced crop losses”. The company’s costs, including raw materials and freight, have increased, causing prices to jump again.
The US Producer Price Index, which is the price producers are paying, rose 9.7% annually in December.
A spokesman for Kraft Heinz said the company was raising prices on products facing the greatest cost pressures, adding that “pricing is not the only thing we are doing to tackle inflation.”
The company is adding larger package sizes and more affordable price points on certain items, the spokesperson said.
High prices for groceries are straining the household budgets of many Americans, forcing some to change how they shop for food and essentials.
Some shoppers are responding by reducing the number of products they are buying and trading for less-expensive, private-label brands, according to business, market data, public surveys and interviews with customers. Others are going to the cheaper store.