Food Manufacturers’ Surprise Profitability Set to Continue, High Prices Will Test Consumers | CoBank - CoBank Site

Food Manufacturers’ Surprise Profitability Set to Continue, High Prices Will Test Consumers

February 10, 2022

Key Points

Before the pandemic, conventional wisdom held that cost inflation squeezes food manufacturing margins, but that did not happen in 2021.
A perfect storm of increasing input costs in mid 2021 led to a series of pricing adjustments, some of which are just now hitting grocery shelves. Additionally, consumer food spending has not returned to pre-pandemic patterns, upending industry expectations.
With pricing actions taking full effect and consumers’ grocery demand continuing to be strong, retail food manufacturers will continue to enjoy robust profit margins in 2022.
The Consumer Price Index (CPI) for food at home will remain elevated through 2022, and may even edge higher in the first half of the year.

Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.

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