Snack Prices Are Soaring And It’s Only Getting Worse
Snack prices are soaring and its only going to get worse
This article is more than 2 years old
Everything and I really mean every little thing you can think of, is getting more expensive. On top of soaring prices permeating throughout all industries, there is also nationwide product scarcity. All sorts of goods are disappearing from or never even making it to store shelves. Both of these circumstances are occurring for two overarching reasons (that the world can thank the pandemic for) global supply chain and labor shortages. Unfortunately, economic experts are predicting that things aren’t going to ease up any time soon, in fact, things are likely to get far worse before they get better. Now, according to NPR, even snacks (which are typically overstocked because of their long shelf life) are being adversely affected by the state of the supply chain and labor forces.
Mondelēz International’s Chief Financial Officer Luca Zaramella announced in an investor call on Tuesday that consumers in the United States can expect the pricing for their products, particularly their snack foods, to increase between 6-7% after the new year. The CFO cited the main reason for the increase being “industrywide supply chain constraints” as well as sustained inflation that has caused costs to rise for “…commodities, transportation, and packaging.” Zaramella also noted that these circumstances are only being exacerbated further by widespread labor shortages.
Mondelēz International is one of the largest manufacturers of popular snack foods that are exported to the United States. Some of their best-selling products include snacks like Chips Ahoy and Ritz Crackers. To break down what the 6-7% price hikes could mean for the costs of some of your favorite snacks let’s consider the current cost of a package of Chips Ahoy cookies. On Amazon, one party size package of Chips Ahoy is currently listed at $4.48. A 7% increase on that price would bring the price to $4.79, which doesn’t seem too terrible. However, if you happen to live in one of the 34 states that charge sales tax for snack foods and candies then you can expect to pay upwards of $5. For instance, sales tax in New Jersey is currently 6.8%, if that tax is added to $4.79 it would bring the total cost of one package of cookies to $5.12. Factoring in sales tax brings the total product price increase to a staggering 14.3%.
Furthermore, Mondelēz International is not alone in announcing price increases for its snacks and other products. NPR detailed further that Unilever previously announced a 4% price increase for a large number of its products last month. Additionally, it’s not just big manufacturers who are announcing price increases because when a manufacturer raises their prices that has a trickle-down effect. Companies who purchase from said manufacturers will inevitably have to pay more for products at wholesale, as well. CNN reported that as a direct result of the jump in prices, and in order to offset their own additional expenditures, McDonald’s is planning to increase the cost of the items on its menu by 6%.
However, for now, despite the price hikes for snacks and other products, it looks as though consumers are not being heavily phased by the rising prices. This, at present, could bode well for the pandemic-fatigued economy, but it still remains to be seen how long this nationwide spending spree will last and what would happen if/when that bubble bursts.
