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Tariffs are driving up prices on canned fruits and vegetables, says Del Monte CEO
[NEW YORK] If your supermarket bill seems to be inching higher, it's not just your imagination.
The US is in an "inflationary environment" right now, according to Greg Longstreet, chief executive officer of Del Monte Foods, with tariffs driving up prices on his company's canned fruits and vegetables.
"Tariffs impacted us immediately," he said in an interview in New York.
The Trump administration placed a 25 per cent tariff on steel imports and 10 per cent tariff on aluminium imports in March 2018, leading US producers to raise their prices as well. "Canned costs went up 25 per cent overnight," Mr Longstreet said.
Mr Longstreet said transportation costs, which he described as "out of control", and a tight labour market are also causing prices to rise.
In addition to paying more for metal, mandarin oranges' cost has also climbed because of the tariffs. He said the company looked for ways to offset the increase, but ultimately had to pass a 10 per cent hike on to customers.
The company is turning to more non-canned products, which Mr Longstreet estimates will eventually produce 40 per cent of the company's revenue.
Del Monte, which has US$1.5 billion in sales each year, recently unveiled seven new uncanned product lines, including Fruit Crunch parfaits and frozen Veggieful Bites, as it looks to push beyond the can.
Widespread increases in prices could push up inflation, something that's consistently been weaker than the Federal Reserve's 2 per cent target.
Economists currently project gains in inflation of between 0.1 to 0.3 percentage point amid the Chinese tariffs and counter-levies by 2020. Prices for food consumed at home have risen since October after several years of relative stability.
At the same time, Fed policymakers have continued highlighting patience when digesting data.
But Mr Longstreet suggested shoppers are now starting to feel the pinch.
"Consumers are going to pay a little bit more for household goods," he said.