Bumper profit at KitKat producer Nestlé. They should give consumers a break Philip Inman

N:estlé is set to post its best profit since 2008 when full-year figures are released next month. The Swiss maker of consumer favourites, from KitKat to Nespresso coffee, is expected to leave the vital crisis affecting consumers in most of its big markets for shareholders to smile about in 2023.

US competitor Procter & Gamble, which competes with Nestlé on several fronts, has performed such a magic trick. Back in October, diaper maker Pampers said average prices for its product lines rose 9% in the first quarter to the end of September, outpacing a 3% decline in sales.

A similarly upbeat message is expected from John Moller, P&G’s chairman, president and CEO, who has received a 44% pay rise to $17.7m (£14.7m) in 2022, when the company’s second-quarter results are announced later this month. .

Both companies have pledged to maintain or increase dividend payments and buy back shares to reduce the number on the market and thereby increase their value.

Increasing sales and maintaining profits for shareholders appears to be at the expense of higher wages.

Wages across all industries have risen just 4% this year, according to data from private sector pay deals. Only financial services workers and those in business services such as accounting are winning the wage war, pushing the official figure for average earnings growth to 6.9%.

On the other hand, profitability remains strong in most sectors, which raises the question of why workers and consumers are allowing investors to remain largely immune to the pandemic and the fallout from the war in Ukraine. Why accept across-the-board price increases when it contributes to the worst decline in living standards in a century?

P&G raised prices by 9% and organic sales by 7%. At Nestlé’s headquarters in Lake Geneva, executives found that almost 90% of the 8.5% increase in organic sales was the result of higher product prices to keep the underlying commercial operating profit around 17%.

In a reward to investors, chief Mark Schneider said the company aimed to buy back 20 billion Swiss francs (£18 billion) worth of shares between 2022 and 2024 and said it had already bought about half to help boost its share price.

The world’s largest consumer product manufacturers are not alone. there are similar stories in many industries where wages are controlled while the prices charged by the company rise, improving profitability and shareholder dividends.

Obvious examples include energy companies, which have made huge gains over the past two years from the sale of gas, electricity, diesel and gasoline.

They face a windfall tax on their profits. The EU has a tax and so does the UK.

Such a one-time “war tax” on consumer goods producers would cause insurmountable problems, which is why consumers should consider a boycott.

Otherwise we all fall prey to marketing that tells us higher prices are inevitable and here to stay.

Nestlé and P&G tell shareholders that the cost of key raw materials continues to drive profits, but point out how their price increases offset those bills.

We know that Nestlé’s Schneider, who has been in charge of the company for more than five years and earns around £9.5m a year, also faces another potential cost: workers’ wages have to match inflation.

In October he said: “I worry about the development of wages.”

A Nestlé spokesperson declined to comment when asked what salary increases Nestlé employees enjoyed in 2022.

Schneider was one of many corporate executives urging central banks to raise interest rates in an effort to reduce inflation.

However, inflation is not falling fast enough to prevent another year of sharp declines in living standards if employers continue to hold back hard on wage increases.

Rip-off Britain was a slogan that became popular after the 2008 financial crisis, when it was suspected that rip-off price rises were pushing inflation higher than necessary. It’s time for consumer groups to tear down those old posters and start picketing.

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