Unilever Warns of Price Rises Amid Growing Costs – Impact on 2026

Unilever has warned it will push through further price rises over the coming months, as the Marmite, Dove and Hellmann’s owner tries to recoup its own growing costs. The Anglo-Dutch company said that while the pace of price rises slowed in the second quarter, owing in part to World Cup-related discounts and efforts to stay competitive in Brazil, it said these were “temporary factors” and would not shield consumers for long. “We expect underlying price growth to accelerate in the second half as commodity-driven pricing continues to land in market,” the company told shareholders on Tuesday. That could end up translating to higher profits for Unilever, depending on whether consumers keep buying its products, despite the price rises.

Unilever said in its release that its underlying sales were up 5.8% in the second quarter, pushing turnover up 3.8% to €13bn (£11.1bn). “Consumers continued to demand Unilever’s branded products, rather than switching to unbranded cheaper alternatives, despite cost of living pressures, proving the strength of Unilever products’ brand loyalty,” said Victoria Scholar, the head of investment at Interactive Investor. Companies such as Unilever have been grappling with a rise in costs for ingredients and services, owing to higher oil prices since March, when the US-Israeli war on Iran effectively stopped tanker traffic through the strait of Hormuz. Although oil prices have been oscillating amid temporary ceasefires, that has yet to lead to a sustained drop in prices for manufacturers, which are hoping to pass higher costs on to customers.

Why Unilever Is Raising Prices

The key driver behind Unilever’s price increases is a surge in commodity costs, particularly crude oil and agricultural ingredients. Oil prices spiked after geopolitical tensions disrupted shipping routes, raising transportation and packaging expenses. Additionally, the cost of palm oil, soy, and other raw materials used in food and personal care products has risen sharply. Unilever’s hedging strategies have only partially mitigated these pressures, leaving the company with little choice but to raise prices on beloved brands like Dove soap, Marmite spread, and Hellmann’s mayonnaise.

Impact on Consumers and the UK Economy

UK inflation dropped more than expected in June to 2.6%, but City economists are warning that the Bank of England could be forced to tear up its economic forecasts and raise interest rates later this year if oil prices return to above $100 a barrel. Mohamed El-Erian, a professor at the University of Pennsylvania and a former chief economist at the International Monetary Fund, suggested a sustained increase in oil prices could reignite inflationary pressures. For everyday shoppers, this means higher prices at the grocery store for staples like spreads, soaps, and condiments. Below is a comparison of typical price changes for Unilever products versus generic brands.

Key Takeaways for Investors and Consumers

• Brand loyalty is helping Unilever maintain sales volumes despite higher prices.
• Commodity costs, especially oil, are the main driver of price rises in the second half of the year.
• UK inflation could tick up again if oil breaches $100/barrel, pressuring the Bank of England to raise interest rates.
• Consumers may consider switching to own-brand alternatives to save money.

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