While the COVID-19 pandemic appears to be slowing, it’s far from being completely out of our lives. And while there may not be a shortage of consumer goods like there was in the early stages, there has been a price increase on several household staples.
The prices for toilet paper, diapers, feminine hygiene products, and cereal are all trending upward thanks to a shortage of workers putting a squeeze on global supply chains.
Kimberly-Clark and Procter & Gamble (P&G) are leading the way on price increases, not only to protect their bottom line but because the companies feel confident that consumers will pay more for the things they need most.
Paper products will be the first price increase
Kimberly-Clark says it will be raising prices in June on products like Huggies diapers and Scott bathroom tissue. Bathroom tissue is a gravy train for the company because almost everyone uses it at some point during the day and every household buys it without fail every year. According to Statista, the tissue and hygiene paper market generated about $35 billion in revenue in the U.S. alone in 2020.
In September, P&G will also be increasing its prices. According to a report in the Wall Street Journal, the company will add features to categories like baby products and feminine care products to soften the blow so that consumers feel like they are getting more bang for their buck.
Consumers can also expect prices to go up on Gillette razors and Tide detergent because of the continued cost increases for raw materials to produce those items and the increased costs of shipping goods from manufacturing plants to retailers.
“This is one of the bigger increases in commodity costs that we’ve seen over the period of time that I’ve been involved with this, which is a fairly long period of time,” said Jon Moeller, who has been P&G’s Operating Chief for the past 33 years.
Prices will increase as supply chains get stretched further
Consumers should get used to price increases as states continue to open up and put added pressure on supply chains.
"Supply chains around the globe are stretched across almost every industry. Most of this is caused by surging consumer demand which the Commerce Department reported increased by 9.8% in April while manufacturing constraints or bottlenecks can be found everywhere,” William Rieke, adjunct professor for Supply Chain Management at Xavier University in Cincinnati, told ConsumerAffairs.
Rieke says a lack of computer chips is also coming into play.
“Lack of computer chips are occurring in the automotive industry while labor shortages are impacting the ability for poultry producers to supply chicken to restaurants and grocery stores. There is plenty of timber available to supply lumber for the home building and remodeling industry but there have been limited investments in new mill capacity over the last three years to convert timber into lumber,” he said.