March 18, 2011 – By Jessica Wohl
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CHICAGO (Reuters) - Procter & Gamble Co <PG.N> will raise detergent prices by 4.5 percent in June as the world's largest household products maker starts to respond to rising costs for materials, packaging and transportation.
The maker of Tide, Gain and Era laundry detergents said the increase would go into effect on June 6. Prices that shoppers pay are ultimately set by retailers.
P&G and other consumer products makers are dealing with higher costs for paper, aluminum and other goods used in product manufacturing, as well as higher transportation costs. Companies have been cautiously rolling out price increases as shoppers remain cost-conscious, especially in light of rising gasoline prices.
In late February, P&G said that it would raise some prices as it expected more than $1 billion in increased commodity costs this year, as prices for diesel and other necessities climb. At that time, the company also said that its sales goals may be under pressure if business does not improve in the United States and other developed markets.
According to Weeden & Co analyst Javier Escalante, P&G will actually raise the list prices on powder detergents by about 13 percent and reduce the frequency and depth of promotions on liquid detergents.
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Separately, Starbucks Corp <SBUX.O> said it would raise prices on the packaged coffee sold in grocery stores as coffee commodity prices continue to rise.
WILL PAMPERS BE NEXT?
During his February 24 speech, Moeller said that P&G would announce details of price increases over the next month or so. It already has raised North American prices on Duracell batteries. P&G did not announce any price increases on Friday beyond detergent, or provide additional details.
The detergent price increase followed on the heels of a smaller rival's paper products price increase. On Thursday, Kimberly-Clark Corp <KMB.N> said it would raise prices of diapers, toilet paper and baby wipes by 3 percent to 7 percent.
Escalante said that he expects P&G, which makes Pampers and Luvs diapers, to follow the lead Kimberly-Clark took. P&G's detergent price increase and the potential increases it could take on paper goods should offset about $500 million in higher commodity costs, said Escalante, who rates P&G "buy."
Shares of P&G rose 0.3 percent to $60.60 on Friday, putting them nearly flat since the beginning of the year.
(Reporting by Jessica Wohl; Editing by Gary Hill and Carol Bishopric)