Unprecedented inflation ahead as Ukraine crisis adds to costs, says Unilever
The consumer goods firm Unilever has said “unprecedented cost inflation” lies ahead as Russia’s war on Ukraine has added to a surge in energy and ingredient costs, suggesting that shoppers are likely to pay more for well-known brands.
The company, which makes goods ranging from Dove soap to Magnum ice-cream and Marmite, said on Thursday it expected its costs to rise by €2.7bn (£2.3bn) in the second half of 2022, after an already steep increase of €2.1bn expected for the first half.
The increased costs forecast comes as companies grapple with the inflationary pressures that built as the global economy rapidly recovered from the shock of coronavirus pandemic lockdowns and central banks cut interest rates. Russia’s invasion of Ukraine has added to the mix by pushing up energy prices.
Unilever has been directly affected by the invasion. The company has been forced to stop all operations in Ukraine and last month suspended all imports and exports of products into and out of Russia as well as all advertising spending in the country. Unilever had initially remained silent on whether it planned to pull out, and has been criticised by Ukraine’s ambassador to the UK, Vadym Prystaiko, for continuing to run operations in Russia.
Whitbread, the owner of the Premier Inn hotel chain and some restaurant brands, also on Thursday warned of faster cost increases of between 8% and 9% annually because of the impact of the war in Ukraine on energy and food prices.
However, Whitbread also felt confident enough in its prospects to restore its dividend to investors, more than two years after it paused payouts as hotels were forced to close. It said its profits would be partly protected by its “pricing power”, suggesting its executives think they can
Read more on theguardian.com
