By Dave Sebastian and Annie Gasparro 

Makers of everything from diapers to cereal are starting to feel the strain of higher commodity prices, and some are passing the added cost along to consumers.

Kimberly-Clark Corp. said Wednesday it plans to raise selling prices across much of its North America consumer-products business to help counter rising raw-material costs.

The maker of Huggies diapers and Scott paper products said the percentage increases would be in the mid- to high-single digits and take effect in late June. They will apply to the company's baby- and child-care, adult-care and Scott bathroom-tissue businesses.

Consumer-products companies are already firming up prices for many staples as high demand for such items as paper towels, cleaning products and packaged food has meant fewer discounts.

Cheerios maker General Mills Inc. said it will raise prices to partly offset higher freight and manufacturing costs, in addition to rising commodity prices. "Our competitors and retailers are facing the same thing we are," General Mills Chief Executive Jeff Harmening said.

Hormel Foods Corp. said in February it raised prices of its turkey products, such as Jennie-O ground turkey, to counter sharply higher grain costs. If the rally in the commodity markets were to continue, the company would likely pass along further increases, Chief Executive Jim Snee said. Hormel also raised prices of its Skippy peanut butter.

J.M. Smucker Co. said it recently raised prices for its Jif peanut butter and that it might do the same with pet snacks because of higher shipping costs and other inflationary pressure. Smucker Chief Executive Mark Smucker said retailers are passing increases along to consumers. "We only raise prices when costs are meaningfully higher, and we partner with the retailers to make sure it's justified and that we move together, " he said.

Kimberly-Clark said its increases, which will be implemented almost entirely through changes in list prices, are needed to help offset significant commodity cost inflation.

The company in January warned of commodity inflation of $450 million to $600 million in 2021, expecting costs to rise for materials like pulp, recycled fiber and resin. At that time, Chief Executive Michael Hsu said the company wasn't planning for broad-based increases to list prices.

The company said pulp and polymer resin are experiencing shortages.

The last time the Kimberly-Clark raised prices significantly enough to warrant a public statement was 2018 when surging pulp prices drove up the cost of diapers, toilet paper and other products.

"The pricing plans we outlined in January were based on the commodity inflation outlook we provided at that time, so it's fair to say that we wouldn't be announcing these price increases if the commodity environment hadn't worsened," a company spokesman said Wednesday.

Since then, global supply chains, which were already experiencing a crunch due to the Covid-19 pandemic, have seen additional disruptions. The February freeze that triggered mass blackouts in Texas led to chemical plant shutdowns and caused a shortage of the raw materials needed for everything from medical face shields to smartphones. As a result, prices for polyethylene, polypropylene and other chemical compounds reached their highest levels in years in the U.S. as supplies tighten.

Inflation is poised to leap higher in the next few months following on a sharp dip in prices a year ago, Federal Reserve Chairman Jerome Powell said in March.

"We could also see upward pressure on prices if spending rebounds quickly as the economy continues to reopen, particularly if supply bottlenecks limit how quickly production can respond in the near term," Mr. Powell said. "However, these one-time increases in prices are likely to have only transient effects on inflation."

Shipowners, exporters and importers are now racing to secure berths and containers at ports while warning of delays and higher costs for cargoes after engineers freed the Ever Given, a 1,300-foot container ship that had been stuck in the Suez Canal. In the U.S., container ships anchored off the Southern California coast are waiting for space at the ports of Los Angeles and Long Beach. The ships are carrying tens of thousands of boxes holding millions of dollars' worth of washing machines, medical equipment, consumer electronics and other goods that make up global ocean trade.

Sharon Terlep and Colin Kellaher contributed to this article.

Write to Dave Sebastian at dave.sebastian@wsj.com and Annie Gasparro at annie.gasparro@wsj.com

 

(END) Dow Jones Newswires

March 31, 2021 13:25 ET (17:25 GMT)

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