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Kellogg, Kraft say prices will remain high

Consumers may not be too pleased with the forecasts from Kellogg and Kraft, which call for continued high prices for food products, despite the economic downturn now affecting so many sectors.


October 30, 2008
By Reuters/The Globe and Mail

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Gas prices continue their downward trend and farmers are learning to cope with the volatility of up and down commodity prices. Yet consumers expecting a big drop in food prices as commodity costs fall and the economy weakens may be disappointed by comments from Kraft Food Inc. and Kellogg Co. executives. 

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Price increases helped both food makers post better-than-expected third-quarter profits Wednesday, and those increases by Kraft and Kellogg may stay in place on many products because prices are still historically high.

"I don't think you're going to see this dramatic across the board decline," Kellogg chief executive officer David Mackay said when asked about commodities and pricing. Kraft reported a third-quarter profit of 45 cents (US) a share before one-time items, a penny above analysts' estimates. Sales rose 19.4 percent to $10.46-billion.

Kellogg said third-quarter profit rose to 89 cents a share, far better than the 80 cents analysts had forecast. Sales rose nine percent to $3.29-billion. On the NYSE, Kraft Food fell 41 cents to $28.47 and Kellogg slipped 66 cents to $50.02.