That Barbie your little girl will put on her Christmas wish list is going up in price. If you see it available now, go on and pick it up before the price goes up. Toy giant Mattel is warning that it intends to raise prices just in time for Christmas. Mattel isn’t the only big corporation signaling a bigger bite out of your wallet is on the horizon. Everyday necessities for many of us, like coffee, are going to cost you more, too.
It’s a combination of supply chain woes due to the pandemic and the economic reality of inflation that is causing the price increases. The Christmas sales season is the toy industry’s most important of the year, obviously. The company is offsetting higher production and shipping costs by increasing the prices of toys, according to Mattel CEO Ynon Kreiz. It remains to be seen if stores will pass along those price increases to customers. Besides Barbie, Mattel brands include Hot Wheels, Fisher-Price, and American Girl.
The post-pandemic recovery has been stymied by a confluence of challenges tied to the supply chain even as consumer demand has rebounded. Businesses across the board are not only struggling to meet the heightened demand by having enough inventory on hand, they’re also dealing with a shortage of shipping containers and bottlenecks at ports that has increased the cost of moving products around the world.
“We still foresee continuing supply chain challenges for the rest of the year,” Kreiz said. “Of course, there could be still unanticipated supply chain challenges, and it’s hard to tell what the future may hold.”
Hasbro has already announced the same decision.
Hasbro, whose brands include Transformers, My Little Pony and Nerf, told analysts during its earnings call on Monday that it also is trying to work through anticipated port congestion and ongoing ocean shipping constraints that will continue in the second half of the year.
Hasbro CEO Brian Goldner said the toymaker’s decision to raise prices is consistent with “so many consumer product categories across the board where we’re seeing the snapback in [consumer] demand” which is being pitted against supply chain problems.
In other words, act now, parents and grandparents. Prices are going up and supplies are going to become limited before Christmas gets here. Retailers won’t be able to quickly re-stock the hot toys because of supply chain delays. This pre-Christmas announcement is ironic, given that toy sales jumped during the pandemic. Kids were home during lockdowns and school closures so parents got a little desperate to keep them occupied. Times have been good for toy sales.
Mattel, citing robust consumer demand, logged sales in its second quarter ended June 30 that were up 40% over the same period a year ago, spurred by the continued popularity of its Barbie, American Girl dolls and hot Wheels toy brands. Hasbro’s sales rose 54% in its second quarter ended June 27, versus the same period a year ago.
Brace yourself for price increases in coffee, tequila, and bottled water, too. According to the Wall Street Journal, sales are up but the demands are complicated by higher costs for ingredients and shipping. A quick trip to the grocery store will prove that prices are already going up. Little by little, grocery purchases have grown more expensive during the pandemic. Some items have gotten noticeably more expensive. When the pandemic first hit, we all dealt with empty shelves and low inventories of many products. That has pretty much ended but the price increases remain and they aren’t ending now. Ice cream is more expensive now, too. The rise of inflation, after many years of it being non-existent, is to blame.
Nestlé SA, Diageo, and Danone, all said Thursday that sales were rising as key markets rebound from the pandemic, but that the recovery was also leading to rapidly increasing costs for ingredients, packaging and transport.
Nestlé said its ice creams had gotten more expensive, spirits giant Diageo has raised prices on brands like Baileys and Casamigos tequila, and Danone, which owns the Alpro and Silk dairy-substitute brands, said it was increasing prices across all of its categories to try preserve its profitability.
“We do expect price increases to accelerate from what you saw in the first half,” said Nestlé Chief Executive Mark Schneider. “After several years of low inflation, all of a sudden it accelerated very strongly starting in March and is continuing to accelerate.”
Companies across many sectors are contending with rising costs from coffee to aluminum and shipping as the recovery from Covid-19 gains steam. That is leading to higher prices for many goods, pushing U.S. inflation to rise at the fastest pace for more than a decade.
Nestlé said it had raised prices by an average of 1.3% globally in the first six months of the year, driven by North America and Latin America. Prices of its milk-based products and ice cream were up by an average of 3.5%, while its water brands rose 1.6%.
Besides rising production costs, packaging costs, and shipping costs, companies are feeling the pinch of labor shortages along with increased wages to keep the employees they are currently employing. Everything is more expensive now. The question is whether nor not inflation stays around as long-term development, thanks to the pandemic and Biden’s economic policies, or if it is a short-term blip that will correct itself in the near future. Are we heading back to the 70s and the days of Jimmy Carter levels of inflation? That would be especially disastrous while the country tries to recover from 18 months of a pandemic economy. There isn’t a lot of confidence in the Federal Reserve these days and its ability to predict how long inflation may hang around and be a factor in our household budgets.
Some companies, like yogurt maker Danone, are raising prices in places like Latin America, Russia, and Turkey while holding off on raising prices in North America and Europe. That’s because they sell their products to independent stores in Latin America, Russia, and Turkey while in North America and Europe, most of its products are sold through long-term contracts with major retailers. So, new contracts being written now with higher pricing won’t show up until several months down the road.