Chicago: Makers of soap, diapers and other household products are spending much more for fuel and raw materials than expected, which means more price increases are on the way for consumers.

Procter & Gamble Co has lowered the high end of its profit forecast for the year, as it does what it can to trim expenses and as it raises some prices to offset sharply higher costs for materials.

Consumer goods makers are paying more for transport and a variety of materials, from pulp used to make tissues to resin used to make detergent bottles.

Higher gasoline costs are sparked by a variety of factors including unrest in the Middle East, while commodity costs have been jumping due to increased demand and crop issues.

Smaller rival Colgate-Palmolive Co also said higher costs cut into its margins. Its quarterly earnings met analysts' expectations, while P&G's profit was just short of the average forecast.

Earning season

"What's been weird about this earnings season has been the fact that everybody's been missing and no one's cared," said JP Morgan analyst John Faucher.

P&G, the world's largest household goods maker, expects its costs to soar about three times as much at it had anticipated heading into the year, including spikes of 25, 15 and 10 per cent in diesel, resin and pulp, respectively, the CFO Jon Moeller said.

"I don't want to get into ‘shoulda, coulda, woulda' but if you step back, if we didn't have $1.8 billion in commodity cost increases this year, we would have a fantastic bottomline," Moeller said on a call with analysts.

"If anybody on the line can help me with how to forecast commodity costs, just give me a call, I'd be glad to talk.'

Unilever Group, the Anglo-Dutch maker of Dove soap and Hellmann's mayonnaise, said it would squeeze more cost savings out of its operations.

The companies are banking on increasing demand in countries such as China and India as growth in developed markets such as the US and Western Europe has stagnated.

P&G believes economies are getting stronger, but the rate of improvement in developed markets is slower than it had predicted, CEO Bob McDonald said. The pace of US economic growth slowed in the first quarter, another signal that a post-recession rebound is taking longer than many had anticipated.

Higher materials costs are spreading across the packaged goods industry. Soft drink and snack food maker PepsiCo. Inc's profit fell as costs climbed.

Companies are now trimming internal costs and switching to less costly materials when they can before resorting to price increases, echoing steps they took when costs rose in 2008.

They also hope to entice shoppers with new goods, which sometimes carry higher price tags.

Still, looming price increases such as a 7 per cent hike on Pampers diapers add to pressure on shoppers, especially in markets such as the US, where growth is sluggish.

Prices of goods to rise

Whirlpool and Electrolux said shoppers will have to shell out more money to buy washers and dryers this year as the companies pay more for steel, copper and oil. The appliance makers, which reported quarterly earnings last week and beat expectations, said the price increases were only natural considering the rapid rise in material costs this year.

Industry leader Whirlpool, maker of Maytag and KitchenAid appliances, said it now sees raw material and oil-related cost inflation in 2011 of $400 million to $450 million, up about $150 million from its prior outlook. Smaller rival Electrolux of Sweden, the industry No. 2 with brands such as AEG and Frigidaire, forecast raw material cost increases of 2 billion crowns ($328.6 million) this year.

Like Whirlpool, Electrolux has announced price rises and expects them to stick. Price hikes in North America have averaged 4 per cent, and the group wants increases in Europe and Latin America as well. Whirlpool raised prices around the globe in April, with the increases varying from market to market.

"Our priority is to expand our operating margins, particularly in an environment where raw materials have been escalating like they have. We are not chasing share," Whirlpool CEO Jeff Fettig said.

Some analysts worry that price increases will not be accepted by bargain-hungry shoppers and will eventually hurt demand. "I think some will stick in the premium appliance lines, maybe not so much on smaller home goods," said analyst Brian Sozzi at Wall Street Strategies.