Procter & Gamble to increase prices for Tide detergent and other products due to rising costs.

• As commodity and freight costs increase, Procter & Gamble is raising prices on a larger portion of its product line.
• For the second consecutive quarter, P&G increased its inflation forecast.
• Despite appearing confident in its pricing strategy, CEO Jon Moeller cautioned that there may be obstacles in the future.

To safeguard its profit margins, the company is increasing prices across a larger portion of its portfolio due to rising commodity and freight costs.

The consumer giant announced on its earnings call on Wednesday that it has already informed retailers about the price increases for fabric care products, including Tide detergent and Downy dryer sheets, which will take effect on February 28. On Tuesday, the company informed retailers that some personal health care products will experience higher prices in mid-April.

P&G has increased prices on 10 product categories globally, including baby care, feminine care, and skincare.

CFO Andre Schulten stated on the earnings call that the specificity of these moves depends on the category, brand, and product form within a brand. This is not a one-size-fits-all approach.

The Tide owner is not the only company facing rising costs as inflation surges at a record pace. In 2021, the producer price index increased by 9.7% on a 12-month basis, the highest increase ever recorded in data going back to 2010. Additionally, the consumer price index rose by 7% in the same time period, the highest level since 1982.

P&G has raised its inflation forecast for the second consecutive quarter. The company anticipates paying $2.3 billion after tax in commodity costs and $300 million after tax for higher freight costs, an increase from its previous outlook of $2.1 billion on commodities and $200 million on freight.

The company's 6% organic sales growth in its fiscal second quarter was driven by price increases, which accounted for about half of the growth. However, executives noted that most of the pricing changes the company has announced have not yet been implemented.

While higher prices may cause consumers to opt for cheaper alternatives from competitors or private label brands, P&G is confident in its pricing strategy. According to executives, its rivals are also facing commodity cost pressure, but this is not as significant as the foreign currency headwinds that negatively impact P&G due to its global presence.

For 17 out of the last 18 years and 42 out of the last 45 quarters, pricing has been a positive contributor to our top line. When your business model is based on innovation that provides higher levels of delight and solves problems better for consumers, you can charge a little more, as CEO Jon Moeller stated on CNBC's "Squawk Box" on Wednesday.

Despite waiting for most of its announced price hikes to take effect, P&G's market share and business have not been negatively impacted by the hikes that have already been implemented.

According to Moeller on "Squawk Box," while it is still early for commodity-based price increases, there are positive signs. However, there is probably 20% to 30% less price elasticity than expected, and private-label market shares, which offer the lowest price, are down.

Consumers prefer to pay more for well-known brands when it comes to toilet paper and laundry detergent.

Analysts were cautioned by Moeller about potential pricing-related setbacks.

There will be instances where we face consumer or competitive reactions to our pricing decisions.

P&G's shares rose 3.8% in morning trading after the company exceeded Wall Street's expectations in its fiscal second-quarter earnings and revenue. Additionally, the company raised its sales forecast for fiscal 2022.