How Supply Issues Are Increasing Halloween Candy Prices

Buyers of Halloween candy this year are in for more of a trick in order to hand out treats.

The latest inflation report from the U.S. Bureau of Labor Statistics showed a 13.1% increase in candy prices – the largest increase ever recorded by the Consumer Price Index (CPI).

Commodity Prices Rising Due To Geopolitical Conflict and Supply Issues

Inflation in commodity prices is driving the increase.

Sugar prices are up 17% due to supply chain disruptions and poor beet sugar production this year. Flour prices have risen 24%, in part because of Russia’s invasion of Ukraine, which has caused supply issues for exports of fertilizer, wheat and corn.

Also Read: TACKLING THE GLOBAL WHEAT SUPPLY SHORTAGE AMID THE UKRAINE WAR

Total consumer spending on Halloween, including candy, decorations, cards and costumes, according to the National Retail Federation’s annual survey , is expected to be $10.6 billion this year, eclipsing last year’s record $10.1 billion.

However, with the rise in candy prices, consumers may be spending more but getting less when it comes to candy.

Candy Manufacturers Facing Tough Decisions

Candy manufacturers are dealing with supply chain issues, inflation and increasing demand as people return to pre-pandemic levels of Halloween participation. In the process, there have been difficult choices to make.

Hershey’s has seen a double-digit increase in demand and had to choose between maintaining regular products or Halloween and Christmas sweets. The company has had to increase prices by 14% , while reducing its product sizes in order to keep the price on the shelf the same – a phenomenon known as shrinkflation.

Over the summer, competitors Nestle and Mars have also raised prices, by 9.8% and 7% respectively, to keep up with rising costs for raw materials, as well as energy, packaging and transportation.

Hershey’s expects pricing to be a key driver of growth this year, as consumers return to pre-pandemic behaviors.

Global Supply Chain Pressures Are Falling, but Forecasting Still Crucial To Mitigate Disruptions

Global supply chain pressures decreased for the fifth consecutive month in September, moving closer to historical levels, according to the New York Fed’s index. But for retailers and manufacturers this holiday season, the need to raise prices amid continuing inflation means that having efficient and reliable supply chain planning is essential.

Companies need to plan and be prepared to sense and adapt to changing consumer behaviors and market disruptions. Finding ways to control costs and generate savings is difficult but will help firms offset the scarier effects of inflation this Halloween.

If you want to learn more about how manufacturers can mitigate inflation, download GEP’s white paper here .