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Packaging causes hike in cereal prices

Citing cost increases for both packaging and grains, General Mills, Minneapolis, MN, increased the wholesale prices of its cereals in early August by 2.9%, according to a report in Advertising Age.

This follows an earlier announcement that Ralcorp Holdings, St. Louis, MO, was increasing prices of private-label cereals it packs. General Mills had embarked on a value-pricing strategy for cereals 16 months ago when it cut prices an average of 6%. Industry analysts agree that General Mills was hit by "genuine, legitimate" cost increases, but few expect major competitors to follow suit.

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