Feb 13, 2024 - Business

Coca-Cola, Kellogg, Molson Coors among companies benefiting from price increases

an illustration of a quarter styled like a dinner plate with a fork and knife

Illustration: Aïda Amer/Axios

The surprisingly high rate of price increases in January can be traced in part to a continued trend of sticker hikes by some of America's biggest consumer goods companies.

Why it matters: Today's Consumer Price Index figures exceeded expectations and reignited concerns about inflation, triggering a market selloff and ending any holdout hopes for a Fed rate cut in March.

  • Prices rose 0.3% in January from December and 3.1% from a year ago.

Between the lines: Several major companies say price increases are continuing to prop up their sales figures:

  • Coca-Cola's fourth-quarter organic revenue rose by 12%, three-quarters of which was driven by price/mix. In North America, volume was down by 1%.
  • For cereal maker W.K. Kellogg, price/mix was up 7.5% in the fourth quarter, while volume was down 10.1%.
  • At beer giant Molson Coors, price/mix was up 4.2% in the fourth quarter, while volume rose only 0.8%.

What they're saying: "U.S. consumer spending power has held up pretty strongly," Coca-Cola CEO James Quincey said today on a conference call. But "there's a section of the population that has come under pressure from ... the real spending power squeeze from the inflationary effect."

The other side: Watchdog group Accountable.US says the food industry is engaged in "gross profiteering" at the expense of consumers.

The big question: Was this just a one-month blip, or will consumer prices continue to outpace expectations?

  • There's "plenty of time to re-establish the disinflation narrative if (as we expect) the January inflation data prove to be a blip rather than the start of a new trend," Bank of America economist Stephen Juneau wrote today in a research note.
Go deeper