Unilever flags price hikes as Iran war costs stack up

Chief executive Fernando Fernandez expects prices in 2027 to be higher than in 2026.

LONDON – Unilever expects price rises to increase in the fourth quarter and in 2027, it said on Oct 28 as it aligns with other consumer goods makers that have said they will pass on to customers a surge in costs linked to the war with Iran.

Major companies – including Coca-Cola, Procter & Gamble, Nestle and Reckitt – have flagged the risk of further price hikes in 2027 to offset the impact of the US-Israeli war with Iran, which began at the end of February.

Each of these companies raised prices sharply during the Covid-19 pandemic and in the initial months of Russia’s full-scale invasion of Ukraine. They have since spent years trying to win back alienated shoppers who turned to cheaper private label goods.

Now, they face the reality of having to hike prices again to protect shareholder margins.

Chief executive Fernando Fernandez said he expects prices in 2027 to be higher than in 2026.

“Now that we have more clarity about it (the cost environment), we are accelerating pricing.

“We will ensure that we have a good balance between volume and pricing in whatever we do in the short and in the medium term,” he added.

Unilever, whose innovations and focus on marketing helped it recover demand post-pandemic, has in 2026 managed to pass some of its increased commodities costs onto shoppers without hurting sales volumes.

“Given the mix we saw between pricing and volumes, increases in pricing do not concern me,” Jack Martin, a portfolio manager at Unilever shareholder Oberon Investments, said.

“The ability to pass inflationary costs through to customers without unduly affecting volumes is what you hope to see from a well-run consumer company selling staple goods.”

Shares fell 3.4% on Oct 28 as Unilever also reported slower third-quarter sales volume growth than in the second quarter, weighed down by its food business.