With rising costs, Kraft will raise prices next year

With a lower Canadian dollar and commodity costs on the upswing, grocery retailers and manufacturers are looking to raise prices.

One company making the move is Kraft Canada, which says it intends to raise prices across several categories next year. Categories include coffee, bread spreads, meals, ready-to-drink beverages, powdered and liquid water enhancers, spoonables, coatings, desserts, baking and marshmallows.

READ: Food prices expected to increase slightly next year

“As a result of sustained increases in certain commodity costs, continued negative foreign exchange pressures as well as other costs contributing to increases in the Producer Price Index for manufacturers in Canada, Kraft Canada has announced price increases of between six and 15 per cent on products such as Kraft Dinner, Maxwell House and Kraft Peanut Butter,” a statement issued by the Toronto-based company said.

The increases take effect Feb. 1 for all of the company’s customers. A letter was sent to customers last month explaining the increases and when they take effect, a spokesperson for Kraft told Canadian Grocer.

Food manufacturers and supermarkets have been grappling with rising food costs for much of this year–especially on meat and produce–and how much of those costs can be passed on to consumers.

READ: Higher pork and bacon prices help push sales for Maple Leaf Foods

In November, Metro Inc. reported food-basket inflation of 2.5 per cent in its most recent quarter. Speaking to analysts after the quarterly results were released, Metro’s president and CEO, Eric La Flèche, noted that “at some point it’s a good thing that customers have to adjust to a new price reality.”

Kraft cited a declining Canadian dollar as a factor in its prices increases as well as rising commodity costs on items such as coffee.

Statistics Canada's Producer Price Index, which measures the average change in price of goods and services sold by manufacturers and producers in the wholesale market, hit an all-time high of 112.5 last March, up from 109 a year ago.