Today's business and finance round up 11th February 2022
💰Unilever warns of £3bn extra costs from inflation
11th February 2022
Bite-sized business news from the UK and beyond
Good morning This Sunday nearly 100m Americans are expected to tune in to the Super Bowl – the biggest American football game of the year. But of course, it’s more than just a game it's a televisual experience. Businesses are paying a reported $7m to air a 30 second advert during the game with crypto firms expected to take centre stage.
- Unilever warns of £3bn extra costs from inflation
- Jobs market cools but pay still strong
Unilever warns of £3bn extra costs from inflation
What’s going on?
Unilever – maker of dozens of brands including Marmite, Dove and Cornetto - announced that customers should expect more price increases this year as the firm battles rising cost inflation.
Why is this important?
There’s barely a company trading update that goes by without the mention of inflation. In the past two years a host of supply chain issues and post-lockdown demand increases have led to the surging price of raw materials, packaging and freight.
For a huge global business like Unilever this means a considerable rise in their cost base of £3bn. The company says it will do all it can to manage the cost pressure and that profit margins will take a hit. However it warned that some of the extra costs will fall on consumers with the price of products like Hellman’s mayonnaise and Ben and Jerry’s ice cream set to rise.
Unilever has had a tumultuous start to the year, from losing out on buying GlaxoSmithKline’s consumer business for £50bn to being publicly chastised by investors for poor management.
In recent years it's faced growing pressure from shareholders after missing sales and profit targets, and its shares have lagged behind those of its peers.
Last month it announced that it would remove 1,500 managers to simplify its organisational structure in a bid to show investors that the company is on the right track despite recent events.
2022 was billed as the ‘year of the squeeze’ for households as they face budget constraints in all directions from energy bills to higher taxes as well as rising food costs. But businesses are also under cost pressure with a report from the British Chambers of Commerce found that 73% of businesses expect they will soon have no choice but to raise their prices because of the crisis.
Jobs market cools but pay still strong
There was good news for jobseekers as the latest poll by the Recruitment and Employment Confederation and KPMG showed that starting salaries are still accelerating in January as the new year saw a jump in hiring activity.
The monthly survey of 400 recruitment agencies produces a score that measures the demand for workers. January’s reading of 68.6 fell slightly from the previous month. This was the lowest score since May but still well above the historic average.
In the last two years the jobs market has undergone a huge change. Brexit led to many European workers returning home and the pandemic led to the so-called “Great Resignation” as people reassessed their jobs and lives.
All of this resulted in a record number of job vacancies with 1.3m roles across the UK unfilled - an increase of 0.5m from pre-pandemic levels. This shortfall in skilled staff has fuelled a steady rise in salaries as businesses compete for talent.
It comes at a time when UK prices are increasing at their highest rate in 30 years with the Bank of England raising borrowing costs twice in three months to combat it.
There was backlash last week when the Bank’s governor said that Brits should limit their pay requests to prevent the country sliding into a wage-price spiral.
The Bank thinks pressures in the labour market will stop inflation – forecast to rise to 7% in April – falling back to its 2% target unless interest rates rise further.
Stat of the day
Almost 1.5bn fewer pints were sold in British pubs in 2021 than in 2019
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