Companies raise prices on food, shoes, diapers

Huggies diapersPrices on Huggies diapers could go up by as much as 7% this summer due to rising raw material costs. By Annalyn Censky, staff reporter


NEW YORK (CNNMoney) -- Look out! From Huggies diapers to Nike shoes, Americans are about to get less bang for their buck on some of the biggest brands.

This week, paper-products maker Kimberly-Clark announced plans to raise prices on diapers and toilet paper later this summer. Nike said it would increase prices on their shoes. And food companies Kraft, Smuckers and Heinz recently announced price hikes on some of their brands.

"The increases are necessary to offset inflationary pressure from higher raw material and energy costs," Kimberly-Clark (KMB, Fortune 500) said in a press release.

Huggies diapers and Pull-Ups prices will rise by 3% to 7%, the company said. Cottonelle and Scott 1000 toilet paper will rise about 7%.

Kraft Foods (KFT, Fortune 500) raised its price on Maxwell House coffee by 22%, or 70 cents per pound, after Smuckers (SJM) said last month it would raise the price of Folgers by 10%.

The increases come as major brands struggle to keep their profit margins intact, amid surging costs on raw materials. Producer prices rose 1.6% in February alone, the the biggest jump in nearly two years, according to government data released Wednesday.

Until recently, producers and retailers resisted price hikes, fearing they would lose customers during a still-sluggish economy and high unemployment.

Now they're starting to cave, mainly on non-discretionary goods, where they still feel they have some pricing power.

The sticker prices on necessities like food and gas, for example, have surged over the last year. Gas prices are 11% higher than a year ago, and food prices are up 2.3%, according to the latest government inflation data.

"We're at the point now, where its harder for companies to avoid raising prices," said Mark Vitner, Wells Fargo senior economist. "Prices are rising the most for the things we buy the most frequently."

Just last month, Heinz (HNZ, Fortune 500) raised its prices on ketchup and Ore-Ida potatoes. Companies can get away with price hikes on food and even diapers and toilet paper, because these products are viewed as household staples.

But now, economists are wondering if rising commodity prices will lead to more broad-based inflation. The Federal Reserve still says that's not an imminent threat to the economy, but some skeptics disagree.

"I have no doubt by the end of this year, inflation will be running at the top of the Fed's comfort zone or slightly above it," Vitner said.

Last week, New York Fed president William Dudley faced guffaws from a raucous crowd, after he explained that overall inflation remains tame, citing iPad prices as an example.

"I can't eat an iPad," an audience member hollered back, according to one report.

But even prices on some discretionary brands are starting to rise, hinting that broad-based inflation could be next.

Nike (NKE, Fortune 500) shoes for example, aren't exactly considered a necessity, but on Thursday, executives said they plan to significantly raise prices on Nike shoes in 2012, to cope with the rising costs of cotton, as well as oil and transportation.

"Who are you going to believe?" Some egg-head economist, or your own eyes?" Vitner said. "It's obvious to anybody who buys anything that inflation is picking up." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,090.07 -23.47 -0.14%
Nasdaq 4,475.62 19.60 0.44%
S&P 500 1,988.04 4.51 0.23%
Treasuries 2.46 -0.01 -0.45%
Data as of 12:17pm ET
Company Price Change % Change
Apple Inc 97.40 2.68 2.83%
Microsoft Corp 45.22 0.39 0.86%
Facebook Inc 70.45 1.18 1.71%
Juniper Networks Inc... 22.39 -2.43 -9.79%
Bank of America Corp... 15.59 0.07 0.45%
Data as of 12:02pm ET

Sections

These cars and trucks topped J.D. Power's APEAL survey, which measures how much owners like their new vehicles. More

Corporate inversions are on the rise. A U.S. company can greatly lower its tax bill by merging with a foreign firm and legally moving its headquarters abroad. Lawmakers from both parties are unhappy with the trend and want to change the rules. In the meantime, some are saying the move is unpatriotic. More

As 65,000 IDF reservists are tapped to serve in Gaza, Israeli's tech community tries to maintain business as usual, amidst bombs, sirens and employees called to war. More

Court documents show big support from Detroit employees and retirees for a turnaround plan that should help the city emerge quickly from bankruptcy. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.