June 13, 2008 / 10:24 PM / 11 years ago

Kellogg effectively raises prices on some cereals

CHICAGO, June 13 (Reuters) - Kellogg Co (K.N) has cut the box size of six of its cereals, including Froot Loops and Corn Pops, effectively raising prices for the second time this year as it tries to cope with soaring grain and energy costs.

The box size reduction essentially raised the price on the six sweetened cereal brands by low-to-mid single digits on a percentage basis, Kellogg spokeswoman Susanne Norwitz said.

The company raised prices the same amount on many cereal and snack brands by a similar amount in January, she said.

The smaller box sizes began heading to stores on June 2. Rival General Mills Inc (GIS.N) previously reduced the size of its boxes last year to bring the shelf price in line with that of other cereal makers.

Food price have risen sharply in the past several years as food companies pass on higher costs to consumers.

On Friday, the Labor Department said the food component of its consumer price index was up 5.1 percent in May from a year earlier.

Kellogg recently said that costs from commodities, energy, fuel and benefits would rise by an amount equal to about 80 cents per share for the year, from an initial forecast of 65 cents.

Chief Executive David Mackay said in April that more than 80 percent of the company’s commodity costs are hedged this year. (Reporting by Brad Dorfman and Alexandria Sage; editing by Carol Bishopric)

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