Should you buy these 2 consumer stocks amid price hikes?

Highlights

  • The UK-based firms have hiked prices at their fastest pace in September 2021 because of the increase in fuel prices, labour costs, and a rise in raw material prices.
  • The high prices at the consumer level add to fear of inflation in the country, which has yet to recover completely from the multiple crises.

Many of the UK-based firms have hiked prices at the fastest pace in September 2021. Cost increases due to the rise in the fuel prices, labour costs, and the increase in raw material prices, were passed on to consumers. The high prices at the consumer level add to inflation in the country, which has yet to completely recover from multiple crises like supply chain disruption and energy crisis. According to The British Chambers of Commerce, 62% of companies plan to do price hikes over the next three months.

Lack of skilled labourers, supply chain uncertainty and high transport costs are pushing service providers to pass on the high cost to consumers to protect their profit margins leading to high inflation in the UK which will gradually impact the purchasing power of the households and force the central bank to take a firm stance on the interest rate hike to curb inflation.

Let us look at 2 FTSE listed firms that have warned of price hikes in the coming months.

Greggs Plc (LON: GRG)

FTSE250 listed company operates in the food segment offering a range of food and bakery products across its chain of shops and franchisee stores.

The company has been facing a shortage of ingredients and raw materials at its shops along with a shortage of workers. As a result, the company expects the cost to increase across its 2000 shops in the UK by the end of 2021 and into 2022. It reported a 3.5% rise in sales in the third quarter despite multiple concerns.

Greggs Plc current market cap stands at £3,077.45 million. In the last one year, the stock has given 128.2% returns to its shareholders.

Hotel Chocolat Group Plc (LON: HOTC)

The company manufactures a range of chocolates and gift products in the UK and European countries. It retails its products through a network of stores and online websites.

The company expects a price rise of up to 9% across its product range which are sold under the Hotel Chocolat brand name ahead of the Christmas season primarily due to the rise in raw material cost, especially higher price paid for cocoa, which is a key ingredient in its products. Also, labour shortage and increase in transport prices have impacted the company.

Hotel Chocolat Group Plc current market cap stands at £651.45 million. In the last one year, the stock has given 28.3% returns to its shareholders.

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