America’s CEOs couldn’t say it any louder: We’re about to charge you more
- Inflation surged 0.9% from May to June, sparking concerns for CEOs of major companies.
- Biden has said elevated inflation is only temporary, but some CEOs think it could persist.
- To offset inflation, some of those execs said they'll be increasing prices on daily consumer goods.
While the economy is showing promising signs of recovery, adding 850,000 payrolls in June, inflation is also on the rise, concerning some economists and executives. To balance it out, CEOs are saying they will have to raise prices on their goods.
The Bureau of Labor Statistics' monthly Consumer Price Index release showed that inflation in June was much higher than expected, with prices surging 0.9% over May, the highest month-over-month inflation rate since April 2008's 1.0% increase. And while President Joe Biden's administration is confident this surge is only temporary, some economists and CEOs of major companies suggest otherwise.
For example, JPMorgan Chase CEO Jamie Dimon said during an earnings call on July 13 that inflation "could be worse than people think."
"I think it'll be a little bit worse than what the Fed thinks," Dimon said. "I don't think it's only temporary."
On earnings calls for consumer-facing companies, some CEOs are going further and telling analysts that price hikes are coming. Here's what they're saying:
PepsiCo CFO Hugh Johnston
As Insider previously reported, PepsiCo's CFO Hugh Johnston is one of the top executives aiming to increase prices as a result of inflation.
"Is there somewhat more inflationary pressures out there? There is," Johnston said on an earnings call on July 13. "Are we going to be pricing to deal with it? We certainly are."
He added that investments in Pepsi's brands and in supplying customers has allowed the company to take pricing, as it has every year.
Fastenal CFO Holden Lewis
Industrial, construction, and safety supply prices might increase, according to industrial supplies company Fastenal's CFO Holden Lewis.
During an earnings call on July 13, Lewis said the company had done at least one large price increase in the second quarter that was received "fairly well."
"But based on what cost is doing, we'll have to go to the market with some additional ones," he added.
Conagra CEO Sean Connolly
Regular buyers of veggie burgers, popcorn, and whipped cream might see prices on those goods increase.
Conagra CEO Sean Connolly, which holds major foods brands like Gardein and Orville Redenbacher, definitively said the company will be increasing prices as a result of inflation.
"Will Conagra take list pricing increases? The short answer is, yes," he said.
Helen of Troy CEO Julien Mininberg
Beauty products are also not exempt from inflation-related price increases.
Julien Mininberg, CEO of Helen of Troy Limited, which produces houseware and beauty products, said in early July that customers "realize we're in an inflationary environment," easing difficulties with raising prices.
He said the company itself does all it can to control prices before implementing a price increase, and he make this "very clear" to customers. But he also said "consumers have the cash" to pay higher prices.
Simply Good Foods CEO Joseph Scalzo
Simply Good Foods, which makes granola bars and other nutritional snacks, announced price increases in June that CEO Joseph Scalzo said should "offset fiscal 2022 supply chain inflation."
"We believe pricing as well as productivity will enable us to maintain gross margins and continue to invest in initiatives that drive growth," Scalzo said on a July earnings call.
Todd Cunfer, the company's CFO, added that the goal is to price effectively to offset inflation.
McCormick CEO Lawrence Kurzius
Lawrence Kurzius, CEO of spices and seasoning company McCormack, said that while the company is raising prices to offset in inflation, they likely won't go into effect until late 2021.
"To offset rising costs, we are raising prices where appropriate," he said in early July. "But usually, there is a lag time associated with pricing, particularly with how quickly costs are escalating."
He added that the company has previously managed inflationary periods "with a combination of pricing and cost savings."
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