Inflationary pressures ‘never seen before’ across the entire food chain: former Heinz CEO

Former Heinz CEO Bill Johnson told “Cavuto: Coast to coaston Thursday he is “very” worried inflationand notes that “we see pressure that we have never seen before across the whole food link.”

Johnson noted that inflation has a “huge impact” on “simple things, such as container costs coming out of Europe or China.”

He pointed out that costs have risen for freight and fuel, “which everyone just sees as a petrol price, but ultimately dictates the price we pay for packaging, especially plastic packaging.”

Johnson made the comments a day later reported the Ministry of Labor that its consumer price index rose 5.4% year-on-year in July, matching the previous month’s gain as the fastest since August 2008.

Prices rose 0.5% last month and fell from June’s 0.9% rise. Analysts surveyed by Refinitiv expected a gain of 0.5%.

The department said the prices of shelter, food, energy as well as new and used vehicles all rose in July. The energy index rose 1.6%, strengthened by a rise in petrol prices of 2.4%.

CHIPOTLE INCREASING MENU PRICES TO CALCULATE INCREASING EMPLOYEE SALARIES

The Ministry of Labor reported that the price of gas rose 41.8% from the previous year and that the price of food increased by 3.4%.

Gas prices have been rising at the pump for the past few weeks, reaching a national average of $ 3.19 per gallon from Thursday, which is the most expensive average gas price of the year and $ 1.01 higher than at the same time in 2020, according to AAA.

Johnson pointed out that in companies with consumer packaging (CPG) “when one or two start pricing, the whole group recognizes the need and takes the opportunity to start pricing.”

CONSUMER PRICES rise 5.4% annually in July

He also noted that “the industry itself and most consumer industries have lacked price strength over the last two or three decades”, but are currently returning “price strength, at least in the short term.”

Disruptions in the supply chain and labor shortages slowed the pace of economic activity as the country reopened from its COVID-19 barriers.

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GIS GENERAL MILLS, INC. 58.96 -0.06 -0.10%
STZ CONSTELLATION BRANDS, INC. 211.99 -1.20 -0.56%
CMG CHIPOTLE MEXICAN GRILL, INC. 1,875.22 +17.17 + 0.92%

Many companies raise prices to offset the higher costs of materials such as aluminum and timber, in addition to rising gas and vehicle prices.

General Mills, which produces brands including Cheerios and Betty Crocker, expects total input cost inflation of around 7% during the current fiscal year. The company also sees higher costs associated with securing incremental capacity and logistics.

Constellation Brands, whose brands include Corona beer, Svedka vodka and other alcoholic beverages, are also raising prices, according to CFO Garth Hankinson.

Chipotle Mexican Grill raises its menu prices by as much as 4% to offset the cost of increased employee salaries, which was introduced in June, according to the fast-paced restaurant chain. In May, the company announced that it was offering increased wages everywhere, resulting in an average hourly wage of $ 15 before the end of June as part of the ongoing employment boom.

Johnson argued that although food prices have been rising, consumers have not yet reached the point where rising prices will prevent them from buying products.

He said he believes consumers are “appropriate” in the “complaint phase”. However, he does not think, ‘they are at the stage yet where they are ready to rebel, mainly because they have been closed for so long in the last 12 to 18 months that they see an opportunity to get out and they’ is willing to spend the money. “

Johnson also noted that consumers understand and recognize that there is currently a shortage of labor, which is contributing to rising costs.

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The Federal Reserve has insisted that recent price increases are “passing” and that these increases will mitigate once production problems are resolved.

Fed Chairman Jerome Powell has admitted that the timing is uncertain.

Johnson disagreed with the Fed on Thursday, noting that while inflation “may be transient for the Fed and the administration,” it is “certainly not transient for people who go to the grocery store.”

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Fox Business’ Jonathan Garber and Dejaris Holt contributed to this report.

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