Unilever’s Chief Executive Alan Jope has warned that the cost of inflation could worsen in 2022, hiking the prices of cosmetics and personal care items.
The consumer goods group, which generates most of its profit from the beauty sector, has increased prices by 4.1% for Q3, in an effort to counteract rising costs of energy, labour and raw materials.
During Unilever’s trading presentation for the three month period, Jope said the price of palm oil – a fundamental ingredient in personal care products – had risen more than 80% in two years due to labour shortages in Indonesia, one of the world’s major sources of palm oil.
For the trading quarter, ended September, the maker of Dove, Hourglass and Lynx reported 2.5% underlying sales growth compared with 2020’s results, with turnover of €13.5bn.
Beauty was a strong performer for the UK-based business with a 2.6% increase in sales overall, and its skin care brands seeing high single growth, despite an increase in prices already taking effect across the category.
“Cost inflation remains at strongly elevated levels, and this will continue into next year,” said the beauty boss.
“We have and will continue to respond across our categories and markets, taking pricing action and implementing a range of productivity measures to offset increased costs.
“We continue to expect that we will deliver in line with our margin guidance of around flat for the full year.”
Inflation in the UK stands at 3.1%, as measured by the Consumer Prices Index, but the government has laid out plans to reduce inflation to 2%.
However, last month, other sources cited that inflation could reach a 4% peak this year – a ten year high.
