Grocery stores are struggling to stock their shelves. Here's why

New York (CNN Business)The makers of top food and consumer goods brands plan to raise prices in the spring, dashing shoppers’ hopes for a quick drop in their grocery bills.

Kraft Heinz (KHC) said in a recent letter to its customers that it will raise prices in March on dozens of products, including Oscar Mayer cold cuts, hot dogs, sausages, bacon, Velveeta cheese, Maxwell House coffee, TGIF frozen chicken wings, Kool-Aid and Capri Sun drinks.
The increases range from 6.6% on 12oz Velveeta Fresh Packs to 30% on a three-pack of Oscar Mayer turkey bacon. Most cold cuts and beef hot dogs will go up around 10% and coffee around 5%. Some Kool-Aid and Capri Sun drink packs will increase by about 20%.

    “As we enter 2022, inflation continues to dramatically impact the economy,” Kraft Heinz said in a letter dated January 24 to at least one of its wholesale customers that was viewed by CNN Business. The wholesaler shared the letter on the condition of anonymity to protect the company’s relationship with its suppliers.

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      Kraft Heinz is the latest consumer manufacturer to announce plans to boost prices early in the year. Last week, Procter & Gamble (PG) said that it was raising prices for its retail customers by an average of about 8% in February on Tide and Gain laundry detergents, Downy fabric softener and Bounce dryer sheets. Conagra (CAG), which makes such brands as Slim Jim, Marie Callender’s and Birds Eye, recently said it will raise prices later this year as well.

      If retailers decide to pass on any of the increased costs, these items will be more expensive for shoppers in stores. US consumer prices rose 7% annually in December, the steepest climb in 39 years.
      Kraft Heinz has already raised prices on some of these same foods in recent months.
      In October, the company said it would increase prices on Oscar Mayer cold cuts and hot dogs. In November, it said prices on Oscar Mayer beef, lean beef and Angus hot dogs, cheese dogs and other products would go up by around 9%.
      But since those November hikes, Kraft Heinz said in the letter, it has faced “constrained supply, logistic bottlenecks and weather-driven crop losses.” The company’s costs have increased, including on raw ingredients and freight, leading it to bump prices yet again.
      The US producer price index, a gauge for prices manufacturers are paying, rose 9.7% annually in December.
      A Kraft Heinz spokesperson said the company was raising prices on the products experiencing the greatest cost pressures, adding that “pricing is not the only thing we’re doing to combat inflation.”
      The company is adding larger package sizes and more affordable price points on some items, the spokeperson said.

        Higher prices for groceries are putting pressure on many Americans’ household budgets, forcing some to change how they shop for food and essentials.
        Some shoppers are responding by trimming the number of products they’re buying and trading down to less-expensive, private-label brands, according to businesses, market data, public surveys and interviews with customers. Others are switching to cheaper stores.
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