Marmite and Dove owner Unilever warns of price rises due to growing costs

Marmite sitting on a table Photograph: Sebastian Kahnert/DPA/PA Images View image in fullscreen Marmite sitting on a table Photograph: Sebastian Kahnert/DPA/PA Images Marmite and Dove owner Unilever warns of price rises due to growing costs Consumer goods group reports strong sales growth, owing in part to World Cup marketing campaigns Business live – latest updates Unilever has warned it will push through further price rises over the coming months, as the Marmite, Dove and Hellmann’s owner tries to recoup its own growing costs. The Anglo-Dutch company said that while the pace of price rises slowed in the second quarter, owing in part to World Cup-related discounts and efforts to stay competitive in Brazil, it said these were “temporary factors” and would not shield consumers for long. “We expect underlying price growth to accelerate in the second half as commodity-driven pricing continues to land in market,” the company told shareholders on Tuesday. Cottage pie and glass of red, anyone? Britons shun salad despite heat in ‘reverse comfort eating’ Read more That could end up translating to higher profits for Unilever, depending on whether consumers keep buying its products, despite the price rises. Unilever said in its release that its underlying sales were up 5.8% in the second quarter, pushing turnover up 3.8% to €13bn (£11.1bn). “Consumers continued to demand Unilever’s branded products, rather than switching to unbranded cheaper alternatives, despite cost-of-living pressures, proving the strength of Unilever products’ brand loyalty,” Victoria Scholar, the head of investment at Interactive Investor, said. Companies such as Unilever have been grappling with a rise in costs for ingredients and services, owing to higher oil prices since March, when the US-Israeli war on Iran effectively stopped tanker traffic through the strait of Hormuz. Although oil prices have been oscillating amid temporary ceasefires, that has yet to lead to a sustained drop in prices for manufacturers, which are hoping to pass higher costs on to customers. UK inflation dropped by more than expected in June to 2.6%, but City economists are warning that Bank of England could be forced to tear up its economic forecasts and raise interest rates later this year if oil prices return to above $100 a barrel. Mohamed El-Erian, a professor at the University of Pennsylvania and a former chief economist at the International Monetary Fund, suggested a sustained increase in oil prices to $90 a barrel could be enough to rewrite UK policymakers’ forecasts. skip past newsletter promotion after newsletter promotion “Should oil prices remain above $90 a barrel, an important ‘if’, then headline inflation would face significant upward pressure. This, in turn, would heighten concerns over immediate indirect effects, including rising food prices driven by diesel transportation costs, and broader second-round effects over time,” he said. That could put further pressure on customers of London-listed