Kraft revealed last week that it had raised prices on cheeses between 5 percent and 12 percent and many Oscar Meyer products by an average of 10 percent. It, too, blamed rising commodities prices.
“Beef turkey and pork prices for our cold cuts have continued to increase and are at record highs as we speak,” the company said.
The price increases come as the Federal Reserve maintains that inflation remains well anchored and below the range where it would consider raising interest rates. The personal consumption expenditures index, which is the central bank’s favored inflation gauge, is up 1.6 percent on an annualized basis, according to the latest reading.
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But for consumers, eating out will also cost more.
Chipotle, for instance, started raising menu prices in late April for the first time in three years last quarter thanks to rising beef, cheese and avocado prices.
Prices went up 6.5 percent on average for burritos, for instance. But that didn’t turn off customers, as the chain reported profits and sales surged. Same-store sales rose 17.3 percent for the quarter versus 10.5 percent that analysts had expected and against an industry that saw nearly flat growth.
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CFO John Hartung talked about the reaction on the earnings call, saying, “Aside from the slight shift from steak to chicken, our customers have generally responded well so far, but it is early and we’ll continue to watch for resistance in terms of fewer customer visits as well as customers trading down.”
Fast-food restaurants across the U.S. are raising pieces to deal with those higher meat costs.
The popular West Coast burger chain In-N-Out has raised prices for its cheeseburgers and Double-Double burgers this summer.
Coffee companies including Starbucks, J.M. Smucker and Kraft, which makes Maxwell House, are also facing higher raw coffee costs and have said they will raise prices for packaged coffee and other prices.
Starbucks boosted some beverage prices five to 20 cents in June and packaged coffee sold in grocery stores by an average 8 percent.
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Smucker lifted its Folgers and Dunkin Donuts packaged coffee in grocery stores 9 percent earlier in the month.
The price hikes aren’t just a result of higher input costs, either.
Sometimes, it’s innovation and new features driving the price hikes.
Like Ford, which said its new best-selling F-150 pickup trucks will be more expensive due to additional features. Price increases range by model from an added $360 to an extra $3,055 for the most expensive truck.
PepsiCo, which also owns Frito-Lay snacks, saw a bump in profits due to higher prices for new products. “Innovation helps us drive pricing,” CEO Indra Nooyi told analysts on the call. The company has been touting new Lay’s flavors including cappuccino, wasabi ginger and mango salsa.
Nike has a similar strategy and has been raising prices around new product launches in sneakers and apparel.
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“We expect average selling prices to increase, driven by our ongoing focus on optimizing pricing and driving our product mix to premium,” said CFO Donald Blair on the earnings call at the end of June.