Unilever Warns of Price Rises as Costs Grow in 2025 2026

Unilever warns of price rises as growing costs pressure the maker of Marmite, Dove, and Hellmann's. The company expects underlying price growth to accelerate in the second half, impacting consumers globally.

Why Unilever Is Raising Prices

Unilever, the Anglo-Dutch consumer goods giant, has announced that it will push through further price increases over the coming months. The company cited rising costs for ingredients and services, driven largely by higher oil prices since March, when geopolitical tensions disrupted tanker traffic through the Strait of Hormuz. Although oil prices have fluctuated with temporary ceasefires, manufacturers have not seen sustained relief.

In its second-quarter report, Unilever noted that price growth slowed temporarily due to World Cup-related discounts and competitive pressures in Brazil. However, these are "temporary factors" and will not shield consumers for long. The company told shareholders that "underlying price growth will accelerate in the second half as commodity-driven pricing continues to land in market."

Impact on Consumers and Brand Loyalty

Despite the price hikes, Unilever reported underlying sales up 5.8% in the second quarter, with turnover rising 3.8% to €13bn (£11.1bn). This suggests that consumers continue to buy branded products rather than switching to cheaper unbranded alternatives, even amid cost-of-living pressures. Victoria Scholar, head of investment at Interactive Investor, noted that this "proves the strength of Unilever products’ brand loyalty."

However, the question remains: how long will consumers tolerate rising prices? With UK inflation dropping to 2.6% in June, better than expected, the Bank of England might still raise interest rates if oil prices surge above $100 a barrel. This could further strain household budgets.

Key Factors Driving Cost Increases

• Higher oil prices affecting transportation and packaging costs.
• Geopolitical tensions disrupting supply chains.
• Commodity-driven pricing for ingredients like palm oil and grains.
• Currency fluctuations impacting import costs.

Comparison of Price Growth: Q1 vs Q2

What This Means for Your Shopping Basket

If you regularly buy Marmite, Dove soap, or Hellmann's mayonnaise, expect to pay more in the coming months. Unilever's strategy is to pass on higher costs to consumers while maintaining profit margins. The company's ability to do so depends on whether shoppers remain loyal to these iconic brands.

For budget-conscious consumers, this might be the time to explore alternatives or look for promotional offers. However, Unilever's strong brand loyalty suggests that many will stick with their favorite products despite the price increases.

Expert Insights

Mohamed El-Erian, a professor at the University of Pennsylvania and former IMF chief economist, warned that a sustained increase in oil prices could have broader economic implications. If oil returns to $100 per barrel, the Bank of England might be forced to revise its forecasts and raise interest rates, which would affect mortgages and loans.

While Unilever expects higher profits if consumers keep buying, the risk is that prolonged price rises could eventually erode brand loyalty. For now, the company remains confident in its pricing power.

Key Takeaways

• Unilever will raise prices further in H2 2025.
• Commodity costs and oil prices are the main drivers.
• Consumers show resilience, but limits may be tested.
• Inflation and interest rates could rise if oil spikes.

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