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Food prices unlikely to fall soon: Unilever finance boss

26-Jul-2023 - Last updated on 26-Jul-2023 at 09:17 GMT

Graeme Pitkethly: 'I think we are past ‘peak’ inflation but there will continue to be a high contribution of pricing growth'

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Unilever is unlikely to lower its food prices any time soon despite the UK hitting peak inflation, as it reports sale growth driven by price hikes in its half year financial results.

Chief financial officer Graeme Pitkethly said price cuts were unlikely, but stressed price growth will continue to “moderate” through the year. This was further fueld by the volatility of commodity markets, particular in nutrition and ice cream.

“I think we are past ‘peak’ inflation but there will continue to be a high contribution of pricing growth,” reported PA Media.

Pitkethly’s comments followed the publication of Unilever’s financial results for the first half of 2023, in which growth for each of its categories was price led with negative volume across the board.

Sales driven by price rises

The group reported underlying sales growth of 9.1% – 9.4% from price and -0.2% from volume.

Nutrition (22% of its business) grew 10.4% with strong growth of dressings, while underlying volumes of -1.9% reflect a challenging European market. Ice cream’s (15% of the business) underlying sales growth was 5.7%, with volumes down 5.2% due to the in-home segment.

Unilever attributed its Nutrition business success to Hellman’s driving sales during Easter, while Ice Cream was supported by limited editions launches in its Magnum range.

Commenting on the results, chief executive Hein Schumacher said: “My early immersion in the business has confirmed my belief in Unilever’s strong fundamentals. The task ahead is to leverage these core strengths – supported by our simplified operating model – to drive improved performance and competitiveness.

“This is our absolute priority and it will mean bringing greater focus and sharper execution, with science-backed innovations and investment behind our brands.

‘Unlocking Unilever’s full potential’

“This opportunity to step up our performance and unlock our full potential makes it an exciting time to lead Unilever. I look forward to sharing further details when we report our Q3 results in October.”

Chris Daly, chief executive of the Chartered Institute of Marketing, said Unilever’s results were under increased scrutiny against a climate of rising prices and inflation, and highlighted accusations of greedflation levelled against the business.

“Despite these challenges, Unilever has displayed forward-thinking by adopting AI tools for product development, demonstrating a commitment to enhancing the customer experience and staying ahead in an already crowded market,” Daly added.

“To maintain success and uphold its reputation, Unilever must prioritise end customers, delivering value and affordability while striking a balance between profit margins and competitive pricing.”