Kraft-Heinz has announced the next wave of anticipated inflationary prices for their products. The announcement, and the timeline they provide for the price increases, is exactly in line with our prior estimations. Prior CTH outlines on the path of inflation for this specific company are HERE (Dec) and HERE (Jan). Keep in mind, depending on the size of the buyer or wholesaler, and depending on the terms of the contracts for purchase, generally speaking, terms are net payment in 30, 60 or 90 days based on 180 day contracted price agreements which include rebates to retailers. Both Proctor & Gamble and Kraft-Heinz provide the best data points to predict future retail grocery inflation. Based on their previous notifications, we can now see that Kraft is anticipating the March – July rates of increase to remain approximately where they have been (20 to 30%) and then stabilize in the last half of the year bringing the yearly average into the “low teens.” This timeline is what we predicted back in October. The prices we will see at the grocery stores will rise again in the spring (this is the backside of the inflationary cycle), continue through mid-summer, and then price increases should likely level off at the end of summer this year. Between the price today and the price at the point of leveling is approximately a 20% increase. Each segment is different. However, on average a $5 item now will cost around $6 mid-summer, then settle. Average food basket prices going into the July 4th holiday will be approximately 20% higher than current, and 40% higher than July 2021. Some items will be 50 to 60% higher July 4, 2022, versus July 4, 2021.
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