ARLINGTON, VA — The Consumer Brands Association (CBA) warns that slowing wholesale prices in the latest Bureau of Labor Statistics readout are still significantly higher than a year ago and that the CPG industry continues to face steep production costs. The July Producer Price Index (PPI) rose 9.8 percent year on year, but for the first time since April 2020 posted a decline of 0.5 percent from the previous month. For the CPG industry, key commodities are still coming in higher than overall wholesale prices, as the food PPI increased 13.3 percent from last year.
“Slowing energy prices fueled the welcome easing reflected in today’s numbers, but with the heavy caveat that we are still far worse than pre-pandemic norms or even last year,” says Katie Denis, vice-president of communications and research at the CBA. “The fragility of our supply chain has been on stark display for the last few years, and we must remain cautious of looming threats that can quickly upset progress and not walk away from policies that help guard against disruption.”
Key commodities once again showed notable increases over last year, the association reports, with diesel fuel prices dropping month on month, but still 71 percent more than the prior year, significantly affecting the CPG industry as it makes up one-fifth of all freight transportation. Commonly used ingredients and materials also showed spikes: wheat is up 22 percent; aluminum is up 13 percent; and edible oils are up 14 percent. Eggs remained 171 percent higher than the same time last year.
July’s wholesale prices come as a new Consumer Brands/Ipsos poll of 1,018 American adults shows significant concern over a host of potential supply chain disruptors. Inflation unexpectedly had the highest intensity of concern; a significant majority reported being at least moderately concerned about every issue polled.
|Concern over potential to disrupt the supply chain||Very Concerned||Moderately Concerned||Not Really Concerned||Not at All Concerned|
|Global events (i.e. war in Ukraine, geopolitical issues)||36%||45%||12%||5%|
|Another wave of COVID-19||23%||39%||26%||12%|
|Lingering effects of the pandemic||18%||47%||25%||9%|
“The last two years have taught consumers that supply chain disruptions mean added costs and, at times, shortages — and the poll numbers confirm they are well aware of the impact unexpected disruptions that have nothing to do with COVID can have,” Denis says. “It is imperative to pursue policies that better enable us to absorb shocks to the system, creating greater economic stability and giving consumers more confidence in the availability and affordability of essentials for their families.”
The poll results confirm that consumers are aware of the link between supply chain pressures and inflation. While many respondents expressed no opinion (25 percent), nearly half (48 percent) said easing supply chain pressures would have a positive effect on inflation.
Supply chain costs and constraints remained at the top, edging higher than last month as a top target of consumers’ blame for inflation. While there was little overall movement from last month, supply chain has gained the most blame as the pandemic has earned less.
|What or who do you think is primarily responsible for grocery inflation?||February 2022||June 2022||July 2022|
|President Biden’s policies||27%||29%||30%|
|Supply chain costs and constraints||21%||27%||29%|
|Companies looking to improve profit margins||16%||16%||17%|
|Consumer demand outweighing supply||6%||7%||5%|