The world’s largest food company raised its prices the most in North America, up 9.8%, followed by Latin America with 9.4%, Nestle said in a statement on Thursday.
Rising commodity, packaging, freight and energy costs weighed on the company’s operating profit margin, Nestle (NSRGF) said.
“We limited the impact of unprecedented inflationary pressures and supply chain constraints on our margin development through disciplined cost control and operating efficiencies,” CEO Mark Schneider said in a statement.
Despite higher prices, the company, which counts KitKat and Nescafé among its brands, increased its organic sales 8.1% during the period, driven by strong demand for its Purina pet food products.
Skyrocketing global inflation has raised costs for the world’s biggest manufacturers, who have then passed them on to consumers. Unilever (UL)one of Nestlé’s competitors said on Tuesday that it raised its prices by an average of 9.8% in the first six months of the year.
Higher prices have also fueled global food insecurity, made worse by the Russian invasion of Ukraine in February. The war has pushed the cost of energy and basic goods to record levels, squeezing poorer countries that depend on imports.
There is good news: global food prices have fallen for three months in a row, according to the Food and Agriculture Organization of the United Nations Food Price Index, although they were still 23% higher in June in comparison with the previous year.
The World Food Program (WFP) estimates that 47 million people have entered a stage of acute hunger as a result of the war in Ukraine.
Last week, Russia and Ukraine signed an agreement that would allow exports of grains and oilseeds from Ukraine’s Black Sea ports to restart after months of blockades.
— Julia Horowitz, Rob Picheta, Jomana Karadsheh, Radina Gigova, and Tim Lister contributed reporting.