Tyson Foods says a historic rise in inflation is the reason for an across the board price increase for its products. The company, which is the nation’s largest meat producer, says inflation in grain, labor, and freight cost is leading to the spike in its prices.
The news comes as another food giant, SYSCO, has stopped delivery to many restaurants.
In the quarter that ended on July 3, Tyson raised its average price for pork by a whopping 39 percent, beef by 12 percent, and chicken by 16 percent, according Tyson Foods CEO Donnie King.
“Costs are hitting us faster than we can get pricing at this point,” King stated
To offset skyrocketing inflation, Tyson has increased prices for restaurants and plans to raise all retail prices for shoppers on Sept. 5. King warned that more price increases are being planned in the near future.
“We have seen accelerating and unprecedented inflation,” King said in reference to Tyson’s prepared foods business line. “Inflation is up about 14 percent during our 3Q [third quarter] and 9 percent year-to-date.”
Tyson, like other companies, has been grappling with higher raw material costs and global supply chain challenges, along with a sharp rebound in demand.
“Retail orders, for example, are up 30 percent versus pre-COVID levels,” King said. “We continue to believe that the ongoing inflationary environment will create a meaningful headwind for Prepared Foods in the upcoming quarter.
“Raw material cost, logistics, ingredients, packaging, and labor are all challenging our cost of production. To offset inflationary pressure, we’re focused on pricing, revenue management, and commercial spend optimization.”
Calling labor the “single biggest issue we face” across all of Tyson’s business lines, King said the company has responded by raising wages, creating flexible shifts, and setting up on-site child care arrangements.
The price hike plans come as economists have increasingly sounded the alarm on inflation, with some expressing concern that if prices rise too fast and stay high for too long, expectations of further price increases could take hold, driving up demand for wages and potentially triggering the kind of wage-price spiral that plagued the economy in the 1970s.