The CEO of Kellogg Company has warned that additional price hikes may be coming as the company faces skyrocketing costs for ingredients and raw materials.
'As we enter 2022, we are still seeing double-digit cost inflation,' CEO Steve Cahillane said in an interview with CNBC on Thursday.
The warning came as the consumer price index hit a 7.5 percent annual increase for January, the quickest increase in 40 years, and PepsiCo and Coca-Cola issued similar warnings about pressure from rising costs.
Kellogg said in an earnings report Thursday that soaring costs for freight and ingredients such as wheat, corn and edible oils have significantly hurt packaged food companies, leaving them with little choice but to hike prices.
However, Kellogg expects 2022 profits to grow by 1 to 2 percent, thanks to increased prices for its popular breakfast cereals and snacks such as Pop-Tarts and Pringles.
'As we enter 2022, we are still seeing double-digit cost inflation,' Kellogg CEO Steve Cahillane said in an interview with CNBC on Thursday
Inflation hit a 40-year high of 7.5 percent, the Labor Department announced Thursday, a figure not seen since the Carter administration
'We don't want prices to get too high, but we're in an environment where it's broad-based, it's across everything, but we've been able to cover it. Our pricing performance has been very solid,' Cahillane said.
'Our goal is to cover all of those input costs with pricing and productivity, and we think we're in very good shape to do that,' he said.
Shares of Kellogg rose about 3 percent on Thursday after the company forecast full-year profit growth above market expectations, riding on higher product prices.
Meanwhile, the world's top two cola makers, Coca-Cola and PepsiCo, also issued earnings on Thursday, and warned that a relentless rise in costs could put pressure on profits.
Nevertheless, both companies trounced sales expectations by raising prices, saying they still saw strong demand.
Costs from aluminum cans to labor and shipping have surged in the last year due to pandemic-induced global supply-chain disruptions, forcing companies across the packaged food industry to respond with price hikes.
However, with costs still rising and supply bottlenecks showing little signs of easing, analysts caution that the price hikes will likely not be enough to fully cushion the industry's profit margins.
PepsiCo finance chief Hugh Johnston told Reuters the company could potentially raise prices further later in the year if costs climb more than expected, and did not rule out some product shortages.
'We control our supply chain basically all the way to the shelf. That puts us in a relatively better position, but I wouldn't say we're not going to have challenges. We're not immune to that,' Johnston said.
The company's arch rival from Atlanta echoed a similar sentiment.
'Is it likely to be perfect this year? No, but we are doing the maximum we can to optimize our full availability,' Coca-Cola Chief Executive Officer James Quincey said on an analyst call.
Coca-Cola stock rose 0.52 percent while PepsiCo shares sank 2 percent.
On Thursday morning, the Labor Department said the U.S. inflation rate hit a 40-year high in January, with prices rising 7.5 percent from last year.
Prices rose by 0.6 percent from December, going up for the sixth consecutive time and signaling the months-long surge that's been hitting Americans in the pocketbooks is not slowing down.
The average U.S. household spent an extra $250 per month as prices have leapt, according to a new analysis published in the Wall Street Journal on Thursday.
A customer shops at at a grocery store on February 10 in Miami, Florida. The Labor Department announced that consumer prices jumped 7.5% last month compared with 12 months earlier
Americans paid more for virtually every facet of life last month, from food to cars, and even housing and their monthly bills.
Energy costs rose by a staggering average of 27 percent, amid right-wing criticism of Biden's efforts to revamp the sector and move away from a dependence on fossil fuels.
The latest data show drivers are still hurting at the pump, with gas prices up 40 percent from last year. Used cars and trucks are up by 40.5 percent.
Costs at the dinner table are also up. Grocery prices are up by an average 7.4 percent since January 2021. People can also expect to pay more for meat, eggs, poultry and fish after their costs rose by 12.2 percent last month.
Household furnishings and supplies saw their largest price increase on record as costs jumped by 2 percent from December to January, an increase of 9.3 percent from a year ago.
Rent the highest in 20 years, electricity the most expensive since 2005 and furniture prices higher than EVER: The staggering costs hitting Americans' pockets under Biden as inflation soarsThe high inflation rate has slammed Americans in the pocketbooks as basic costs of living - such as food, electricity, gas, and shelter - have skyrocketed during Joe Biden's presidency.
Inflation hit a 40-year high in January, with prices rising 7.5% from last year. That number was driven by higher costs of food, electricity and shelter costs, the Bureau of Labor Statistics said on Thursday. Medical costs have also risen during the pandemic.
The number was an unpleasant surprise for the White House, which continues to argue that inflation will naturally go down over the next year. It also presents a dilemma for the Federal Reserve, which is weighing raising interest rates in March.
But while Washington dithers, Americans are paying the price.
Apartment rental costs rose 0.5% in January, the fastest pace in 20 years. Electricity prices were up 4.2% last month, the sharpest rise in 15 years and a 10% increase from last year.
Additionally last month, household furniture and supplies rose 1.6%, the largest one-month increase on records dating to 1967.
The average U.S. household is spending an additional $250 a month because of
