The scale of soaring inflation was spelled out this week, as a raft of the world’s biggest fmcg companies raised growth expectations amid double-digit hikes to prices.

Unilever, Danone, Reckitt Benckiser and Nestlé were among those to report higher-than-expected quarterly sales figures this week, as steepling prices enabled them to raise full-year sales guidance.

Unilever said its prices had risen 11.2% in its second quarter year on year, resulting in overall organic growth of 9.1% despite a 2.1% drop in volumes.

The fmcg giant guided towards a full-year drop in sales volumes despite raising value growth expectations.

Reckitt Benckiser and Danone held on to volume growth despite price hikes. Reckitt saw price inflation of 9.7% in the quarter, leading to 11.9% like-for-like growth, while Danone posted a like-for-like sales hike of 7.7%, driven by 6.8% price growth.

Nestlé posted better-than-expected underlying sales growth of 8.7% in its second quarter as prices rose 7.6%.

In the US, Kraft Heinz pushed up prices more than 12 percentage points in its second quarter. Meanwhile, Coca-Cola’s organic revenues increased 16% thanks to a 12% jump in its pricing and its products mix.

The scale of price increases saw almost all the consumer giants raise their full-year sales expectations as they said they would continue passing on most cost inflation to customers.

Unilever, which now expects 2022 sales to be above its previously guided 4.5% to 6.5% range, said prices had grown strongly in home care as the category was particularly exposed to rising input costs.

The group’s home care prices were up 14.5% in the first half, with beauty and personal care up 9% and food inflation of 8.3%.

Meanwhile, Nestlé boss Mark Schneider said the group had found it easier to push through price increases and quickly recover margins in household products and cosmetics, while in food pricing was taking longer to catch up with input costs.

The delays in cost input recovery have resulted in margins contracting across the sector. Nestlé was the first consumer giant to guide down margin expectations for the year.

Unilever guided towards a full year drop in sales volumes despite the overall growth guidance hike as CEO Alan Jope suggested consumer downtrading to own-label brands, causing the brand to raise its marketing spend.

Jope commented: “We’re likely to see peak cost inflation sometime in the second half of the year, the threat of recession is starting to impact consumer confidence and change spending patterns and behaviours and the pandemic is still with us.”

“Our brands are in good health with more than 80 percent of our turnover with either stable or growing brand power and this is critical as we reset pricing and in dealing with inflation.”

Analysts noted that consumer goods companies still seem comfortable with taking temporary hits on profits due rather than prioritising margin recovery.

Barclays noted: “Unilever are walking away from explicit margin guidance. This makes sense, as it will allow them to increase reinvestment and double down on their growth opportunities.”

On Nestle’s margin downgrade, Bernstein added: “Nestle is the first one to soften its full year margin guidance… [But] yhat is still a very strong margin, with a much smaller year-on-year margin decline than most of its European peers.”