Can't Hide From Diaper Inflation
Bloomberg Businessweek|July 19, 2021
Lower-income households are struggling to absorb double-digit price increases
By Gerald Porter Jr., with Fabiana Batista

Each box of diapers demands another sacrifice from Richard Dixson’s family. First it was forgoing his wife’s trips to Whole Foods for vegan products. Now his 8- and 6-year-old granddaughters won’t be attending summer camp. The guardian of four won’t see any relief until his twin 3-year-old grandsons are done running through pull-ups that Dixson says cost almost $300 a month.

Families that were already struggling during the pandemic are facing a heavier burden as inflation makes an unavoidable expense costlier. Overall consumer prices rose 0.9% in June, the biggest jump since 2008, and are up 5.4% over the past 12 months. Discretionary purchases such as cars, apparel, and restaurant meals can be delayed. But diapers won’t wait. “It’s not like we’re making cuts in areas of disposable income,” says Dixson, 59, who lives in Kansas City, Mo. “We’re making cuts on necessities. We feel it every week.”

The average unit price of disposable diapers rose 14% from January 2020 to January 2021 and has remained elevated ever since, according to data from Nielsen. Packages that were priced at about $25 last year now can cost $40—and they come with fewer diapers inside. Indeed, baby-care items from rash ointments to wipes have seen double-digit increases in the past 12 months, and companies have indicated prices will rise again before the end of the year. On top of that, diapers are taxed in 36 states, anywhere from 2.5% to 7%, according to the National Diaper Bank Network.

America’s diaper duopoly makes the impact of price increases almost inescapable. The most popular brands—Huggies, Luvs, Pampers, and Pull-Ups—are all made by either Kimberly-Clark Corp. or Procter & Gamble Co., which together account for 70% of the U.S. diaper market. In earnings calls, executives have said price increases are necessary to protect profit margins, which are being eroded by the rising costs of raw materials.

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