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Northern Foods Set To Push Prices Higher

News that Northern Foods is expecting a combined £32 million increase in utility and commodity costs over the current year has been expected for some time. Interestingly the company will be passing on these costs to customers, having already instigated a 5.5% for the current quarter, indicating that they believe demand will not fall and consumers will be willing to pay the higher price for goods.

The group itself is probably best known for its Goodfella pizzas, Fox's biscuits and for supplying a number of high streets customers such as Marks and Spencer. In a sign of faith for the future Northern Foods also announced that profits forecasts for the year should remain unchanged with analysts expecting anywhere between £40 million and £55 million, with the consensus around the £50 million level.

Even in the face of this confidence for the short to medium term performance of the group, a number or analysts have taken out their red pens and marked down their forecasts for the year, with Citigroup executive Eamonn Ferry recommending a sale of the shares.

The fact that the confident statement from Northern Foods has been ignored shows the attitude of investors at the moment - if it sounds too good to be true, it is and if it is bad news then it was what we expected.

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