Nestle SA Chief Executive Officer Mark Schneider said inflation will remain an issue in 2023 even after the world's largest food maker pushes through the biggest price increases in decades this year.

“This is a situation no one wished for,” CEO Mark Schneider said in an interview with Bloomberg Television. “We are seeing huge upward pressure on energy, some of the agricultural commodities and also transportation costs.”

The volume of goods sold eased by 0.2 per cent in the third quarter as Nestle raised prices 9.5 per cent. Until now, consumers have been willing to absorb higher costs despite a spike in inflation that's squeezed household budgets and lifted manufacturers' raw material costs. 

Nestle hasn't passed on all its higher input costs onto consumers, the CEO said. The impact of higher energy prices in Europe also risks stifling demand for Nestle as cash-strapped consumers switch to cheaper products. Wages will add to cost pressure next year with negotiations in most countries to take place by the first quarter, Schneider said. 

The maker of Nespresso coffee pods and Purina pet food said for 2022 it expects full-year revenue growth of about 8 per cent, the top end of its previous forecast range. The group confirmed its 17 per cent operating margin target for the year, which would be the second consecutive annual decline.

Concerns have been rising that makers of branded packaged goods may start to lose market share to private label producers. Inflation is soaring globally, with the rate in the euro-area hitting a record 10 per cent last month. In the U.K., prices for food and non-alcoholic drinks rose 14.6 per cent in the year to September, data showed on Wednesday. 

Though the quarterly drop in volume suggests the strategy of increasing prices may eventually bump up against a limit, analysts weren't overly alarmed.

There's “no sign of imminent consumer doom yet,” Bruno Monteyne, analyst at Bernstein said in a note. “The company keeps doing what it always does: strong growth, diversified strength, and no surprises.”

The stock was little changed at 11:19 a.m. in Zurich.

While Purina and Nescafe led growth, dairy, ice cream, prepared meals and cooking aids showed signs of softening demand. At Nespresso, volumes declined and European sales dropped after a strong 2021, when growth was in double digits.  

Nestle said Wednesday it plans to buy the Seattle's Best Coffee brand from Starbucks Corp. for an undisclosed price, expanding a four-year alliance.