Kraft, Tyson and McDonald’s owners say higher costs will be passed on to customers 

Estimated read time 10 min read


The already exorbitant prices American consumers are spending on groceries is expected to increase even more as company executives continue to pass on the high costs of fuel, labor and ingredients onto shoppers.

Executives at companies like Kraft Heinz, Tyson Foods and even eateries like McDonalds have announced they will continue to raise prices, as they face these higher costs, according to the Wall Street Journal.

Kraft, for example, notified retailers on Monday that it would raise prices in August on items ranging from Miracle Whip and Classico pasta sauce to Maxwell House coffee products and some deli meats.

Cory Onell, the company’s chief sales officer, wrote to investors that the persistent increase in costs makes it necessary to announce price increases.

And executives at McDonalds and Tyson Foods said they will soon have to increase their prices even more amid high costs of production as high fuel costs make it more expensive to produce and sell food.

Exacerbating the problem is Russia’s continued invasion of Ukraine – one of the world’s largest grain-producing regions, which is increasing the price of pantry staples, cooking oils and livestock feed, as well as bad weather affecting other major crop-producing companies including Australia and India.

As a result, the Labor Department reported on Friday that grocery prices were up 11.9 percent last month, while food away from home was up 7.4 percent.

The figure came as part of the Labor Department’s consumer price index, which jumped 1 percent in May from the prior month, for a 12-month increase of 8.6 percent – topping the recent peak seen in March and hitting its highest level since December 1981. 

But production problems are only expected to continue, as factories remain short-staffed from the pandemic and farmers are getting a late planting start this year due to the cold and wet weather across the Midwest.

Kraft Heinz, the maker of Maxwell House, has announced that it would raise prices on its products amid increasing production costs

Kraft Heinz, the maker of Maxwell House, has announced that it would raise prices on its products amid increasing production costs

The Labor Department reported on Friday that the cost of groceries were up 11.9 percent last month as a result of Russia's ongoing invasion of Ukraine, high gas prices and staff shortages

The Labor Department reported on Friday that the cost of groceries were up 11.9 percent last month as a result of Russia’s ongoing invasion of Ukraine, high gas prices and staff shortages

The figure was included in the Labor Department's consumer price index, which showed that inflation rose 8.6 percent in May

The figure was included in the Labor Department’s consumer price index, which showed that inflation rose 8.6 percent in May

Inflation in May was hotter than economists had expected, and topped the recent peak of 8.5 percent set in March

Inflation in May was hotter than economists had expected, and topped the recent peak of 8.5 percent set in March

Consumers have already seen exorbitantly high prices for food – with boneless, skinless chicken breasts up a whopping 68 percent since the beginning of the year and the price of eggs up 32.2 percent over last year.

Kraft Heinz – once a staple of easy-to-make and cheap foods – also raised its prices in the beginning of the year, with CNN reporting that one regional distributor to grocery stores received a letter in November saying it would raise prices on hundreds of items.

Varieties of Jell-O and Jell-O pudding, for example, would increase about 7 to 16 percent, while Bagel Bites increased roughly 10 percent and varieties of Cool Whip jumped by about 7 to 10 percent.

The price of a pack of EZ Mac also rose 3.5 percent, and a dish of Kraft Big Bowl Mac and Cheese increased a whopping 20 percent.

Tyson Foods increased its beef prices by an average of 24 percent over a three month period ending April 2, while its costs increased by 15 percent due to higher expenses for animal feed, freight and labor.

Its competitor Sanderson Farms Inc also raised prices for its products by about 34 percent for the quarter ending on April 30. 

Mondelez – the creator of Chips Ahoy! and Belvita – meanwhile, increased its prices between 6 to 7 percent in January, and CEO Dirk Van de Put announced recently that more prices increases will come.

And at McDonald’s franchisees are looking at increasing their prices, after menu prices already increased about 8 percent in the first quarter of 2022 when compared to the same time just one year ago, according to Restaurant Dive.

Now, many Americans are changing the way they shop, with a new Washington Post-Schar School poll finding that 87 percent of respondents have made a concerted effort to find the cheapest prices for the products they buy and 77 percent said they are cutting back on eating out or spending on entertainment.

At McDonald's, executives said they are trying to keep their prices low for consumers after already raising prices about 8 percent in the first quarter of 2022

At McDonald’s, executives said they are trying to keep their prices low for consumers after already raising prices about 8 percent in the first quarter of 2022

Kraft Heinz has also already raised its prices across the board

Kraft Heinz has also already raised its prices across the board

Inflation is forcing Americans to make big changes in their shopping and spending habits, and the majority expect price increases to get worse in the next year

Inflation is forcing Americans to make big changes in their shopping and spending habits, and the majority expect price increases to get worse in the next year

Companies are now trying to make up for these increases in costs while also trying to keep customers buying their products.

Some are trying to sell smaller packages at a higher price per ounce while making operations at their factories more efficient, while Kraft Heinz is offering larger package sizes for a better value.

At McDonald’s executives are also studying the impact of its restaurant price increases to make sure they are not too much for customers, with Ian Borden, the head of McDonald’s international business, telling investors on Thursday: ‘We have the approach that we want to do more frequent increases but at smaller levels.’

Campbell’s Soup Company CEO Mark Clouse also said in a conference call on Wednesday that the company was trying to keep prices as reasonable as possible, saying: ‘We know the pressure that consumers are feeling.

And comfort food chain Cracker Barrel said that while it will raise prices later this month, it will keep value items on its menus.

Meanwhile, the Federal Reserve is expected to raise its policy interest rate by an additional half a percentage point in July amid the increasing inflation.

By raising borrowing costs aggressively, the Fed hopes to cool spending and growth enough to curb inflation without tipping the economy into a recession.

President Joe Biden has also conceded that inflation remains high after previously claiming that inflation had peaked as far back as December, and tried to strike a hopeful note in more recent months.

His reaction to the May figure, though, struck a more somber tone, while still blaming Vladimir Putin and Republicans in Congress.

‘Today’s report underscores why I have made fighting inflation my top economic priority,’ Biden said in a statement, conceding that ‘it is not coming down as sharply and as quickly as we must see.’ 

He went on to blame Russia and Republicans for high inflation, calling rising food and energy costs ‘Putin’s Price Hike,’ and called on Congress to pass ‘tax reform to make the wealthiest Americans and big corporations pay their fair share,’ claiming that this would reduce inflationary pressure by lowering the federal deficit. 

Inflation has emerged as a key threat to Biden and congressional Democrats in the midterms

Inflation has emerged as a key threat to Biden and congressional Democrats in the midterms

Biden’s full statement on May inflation rate 

‘Today’s report underscores why I have made fighting inflation my top economic priority. While it is good to see critical ‘core’ inflation moderating, it is not coming down as sharply and as quickly as we must see. Putin’s Price Hike hit hard in May here and around the world: high gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine. Even as we continue our work to defend freedom in Ukraine, we must do more—and quickly—to get prices down here in the United States. 

‘My Administration will continue to do everything we can to lower prices for the American people. Congress must act urgently as well. I call on Congress to pass a bill to cut shipping costs this month, and get it to my desk, so we can lower the price of goods. And, I call on Congress to pass legislation to cut costs for families like energy bills and prescription drugs. The deficit has come down more under my watch as President than at any time in history, but if Congress would pass tax reform to make the wealthiest Americans and big corporations pay their fair share, we could reduce this inflationary pressure even more. These are the most significant things Congress can do to help families now and complement the Federal Reserve’s efforts to bring inflation down. 

‘Prices at the pump are a major part of inflation, and the war in Ukraine is a major cause of that. The United States is on track to produce a record amount of oil next year, and I am working with the industry to accelerate this output. But it is also important that the oil and gas and refining industries in this country not use the challenge created by the war in Ukraine as a reason to make things worse for families with excessive profit taking or price hikes. We all have work to do to get inflation down. What will not help is the plan by some Republicans in Congress to raise taxes on the middle class and working families. That would be a step in the wrong direction, and I strongly oppose it.’

Inflation has emerged as a key threat to Biden and congressional Democrats in the midterms, with surveys showing that Americans see high inflation as the nation’s top problem, and most disapprove of Biden’s handling of the economy.

The severe inflation, economists say, is forcing families to pay much more for food, gas and rent and reducing their ability to afford discretionary items, from haircuts to electronics. 

Lower-income Americans, in particular, are struggling because, on average, a larger proportion of their income is consumed by necessities, with one study finding that lower-income households – defined as those with incomes below $50,000 – spent nearly 10 percent of their total expenses on gas in the last week of May.

That’s up from about 7.5 percent in February, a steep increase in such a short period.

Now, Congressional Republicans are hammering Biden and Democrats on the issue, in the run-up to the midterm elections this fall. 

House Minority Leader Kevin McCarthy responded to Friday’s inflation data by tweeting: ‘I call on Speaker Pelosi and House Democrats to hold a prime-time hearing on the out-of-control inflation their policies have created.’ 

Republican National Committee Chairwoman Ronna McDaniel blamed soaring inflation on Democrats’ $1.9 trillion stimulus bill a year ago, noting that inflation has outpaced wages every month since. 

‘Inflation is up and real wages are down. In Joe Biden’s America, everyday essentials are priced as luxury items and Americans are tired of paying the price for Biden’s failed agenda,’ McDaniel said in a statement. ‘The families who are struggling to put food on the table, fill their cars, and find baby formula deserve answers, yet Biden doesn’t care.’ 

Even Jason Furman, a top economic advisor in the Obama administration, admitted the U.S. economy is ‘not in a sustainable place right now’ due to inflation outpacing wages.

‘Right now, we’re in a bad situation where we have a lot more price inflation than wage inflation,’ he told CNBC on Friday.

‘If you tamp down on the economy, you’re going to slow price growth and you’re going to slow wage growth. I don’t have any obvious answer for which one of those slows more than the other.’



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