Hershey is raising prices by 8%.
In the latest sign that inflation could be coming down the pike, the chocolate giant, which has a market cap of about $US21 billion, is boosting prices in response to commodity prices.
The Fed’s preferred measure of inflation — core PCE — excludes the cost of food and gas, but following last week’s commentary from retailers about the state of the U.S. consumer, these price increases can squeeze budgets without showing up in official statistics.
In a press release, Hershey announced an increase across its lines.
“The Hershey Company (NYSE:HSY) today announced an increase in wholesale prices across the majority of its U.S., Puerto Rico and export portfolio.
A weighted average price increase of approximately 8 per cent across the company’s instant consumable, multi-pack, packaged candy and grocery lines is effective today. These changes will help offset part of the significant increases in Hershey’s input costs, including raw materials, packaging, fuel, utilities and transportation, which the company expects to incur in the future.”
Michele Buck, Hershey’s North American president said, “Over the last year key input costs have been volatile and remain at levels that are above historical averages. Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year. Given these trends, we expect significant commodity cost increases in 2015.”
Along with its price increases, the company also said that it expects second quarter net sales to increase 4.5%, including a 0.75% headwind related to foreign currency exchange rates. The company expects adjusted earnings per share to total $US0.75-$0.77. Expectations are for $US0.76.
This chart from FinViz shows the price of cocoa over the last year.
And here’s that same data on a year-over-year basis.