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High Commodity Prices Put Pressure On CPG Manufacturing

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The Consumer Brands Association warned that wholesale prices in the Bureau of Labor Statistics’ Dec. 9 readout showed continued production cost pressures for consumer packaged goods manufacturers. The November Producer Price Index rose 7.4 percent over last year and 0.3 percent since October.

The CPG industry still faces steep commodity prices that remain above overall wholesale prices and well above pre-pandemic levels. While there was some initial respite after a spike in prices this summer, the food manufacturing PPI is up 11.8 percent over November 2021.

“CPG manufacturers are facing tough headwinds, including ongoing labor shortages, as they strive to meet sustained high levels of consumer demand this holiday season,” said Tom Madrecki, VP of supply chain.

“Consumer Brands urges Congress and the administration to enact proactive supply chain policies that will bolster our supply chain to withstand the ongoing challenges we’ve continued to contend with since the pandemic began nearly three years ago.”

The need to prioritize supply chain policies was highlighted last week when national freight rail shutdown was narrowly averted. Consumer Brands commended congressional action to effectively enforce a deal with rail unions just days before the deadline, preventing a strike that would have caused $2 billion in lost economic output a day and catastrophic disruption to the supply chain.

In a new Consumer Brands-Ipsos poll released in December of 1,027 American adults, 49 percent said they believed that solving the problems causing supply chain pressures would have a positive impact on inflation. When asked to rank the top three categories they place blame on for grocery inflation, 27 percent said President Biden’s policies were most responsible, followed by the cost to make and ship products in second place (27 percent) and supply chain constraints were the third most responsible factor at 28 percent.

Further, 71 percent of respondents said they are very or moderately concerned that labor shortages will disrupt the supply chain. Another 66 percent said grocery inflation has had a very significant or somewhat significant impact on their household budget – a 5 percent dip from August but still well above half of all respondents.

The Consumer Brands Association champions the industry whose products Americans depend on every day, representing nearly 2,000 brands. From household and personal care to food and beverage products, the CPG industry plays a role in powering the U.S. economy, contributing $2 trillion to U.S. GDP and supporting more than 20 million American jobs.

For more association news from The Shelby Report, click here.

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