P&G, Unilever raise product prices in China

SHANGHAI - Consumer goods giants Procter and Gamble (P&G) and Unilever Plc/NVhave raised prices of their products by as much as 20 percent in China, as surging raw material costs fuel a rise in consumer prices.

P&G, the biggest consumer goods seller in China, last week lifted prices of Pampers diapers by 6 percent and prices of Whisper sanitary napkins by 15 percent, after raw material costs surged.

Unilever said it had recently raised OMO detergent and Zhong Hua toothpaste prices by as much as 20 percent.

"We have long been under pressure from soaring raw material prices, so raising prices is an on-going process," said P&G China spokesman Charles Zhang.

So far this year, P&G has marked up price tags on half of its 20 brands in China, but that has covered only part of the cost increases, he said.

The latest wave of price hikes in consumer goods ranging from shampoo and toothpaste to skincare products could exert fresh upward pressure on China's inflation.

The government has made battling inflation a top priority for the second half, although consumer inflation ebbed to 7.1 percent in the year to June from February's peak of 8.7 percent, and meetings of the Communist Party leadership and the central bank over the weekend appeared to shift economic policy slightly towards sustaining growth from fighting inflation.

"Companies are gradually passing rising raw material costs onto consumers, which is a natural thing," said Li Huiyong, analyst at Shenyin & Wanguo Securities Co.

(Reuters)