Inflation is running hotter than previously anticipated, and prices are slated to rise an additional 2 to 3 percent over the second half of 2021, Kroger CFO Gary Millerchip said during a call with reporters.
Kroger will be “passing along higher cost to the customer where it makes sense to do so,” he said on Sept. 10.
The comment comes as the price for beef, poultry, and pork have risen at grocery stores in recent months, leading White House officials to blame meat processing companies.
“Just four large conglomerates control the majority of the market for each of these three products [beef, pork and poultry], and the data show that these companies have been raising prices while generating record profits during the pandemic,” said National Economic Council Director Brian Deese at a press briefing on Sept. 8.
“Those companies have seen record or near-record profits in the first half of this year,” Deese said, taking aim at JBS, Tyson Foods, Cargill Meat Solutions Corp., and the National Beef Packing Company. “And that has coincided with a period where we’ve seen disproportionate increase in prices in those segments.”
Secretary of Agriculture Tom Vilsack claimed that some food companies may be price-gouging, although he noted that labor and transportation costs have risen since the start of the COVID-19 pandemic.
“Our job is to make sure that that farmer gets a fair price and that the producer … when I go to the grocery store, and I’m in the checkout line, I’m paying a fair price,” Vilsack said.
Neither official signaled that inflation may be the cause despite the producer price index increasing by 0.7 percent in August 2021 over the previous month. Final demand prices have also risen 8.3 percent from a year ago, which is the biggest increase since 2010, according to a Department of Labor report issued on Sept. 10.
Other than Kroger’s warning, food giant Nestle’s Chief Financial Officer, Francois-Xavier Roger, acknowledged a higher input cost inflation in 2022 than this year.
“If we talk of 2022, it is likely that input cost inflation will be higher next year than this year,” Roger said at a Barclays consumer staples conference, reported the Reuters news agency. “Our strategy is to offset anything we receive through pricing. The idea is to pass it on to the trade and to consumers whenever we receive it,” he said.
Earlier this year, CEO of supermarket chain Albertsons, Vivek Sankaran, said that regarding inflation, “It could go a little bit higher, but … we have a strong consumer” base in the United States.