The London-based company said it expects cost inflation to continue in 2023, forecasting net material inflation in the first half of around €1.5 billion ($1.6 billion).
The industry had already been battling high COVID-era supply chain and raw material expenses when Russia invaded Ukraine, driving up the prices of energy and several other commodities.
"In the first half, underlying price growth will remain high, and volume growth will be negative," Unilever said in a statement. "Volume will improve as price growth softens, but it is too early to say whether volume will turn positive in the second half."
Unwind Price Hikes
Some companies in Europe have said they may unwind price hikes introduced in recent years as soaring costs of energy and other raw materials have eased, potentially providing some relief to consumers.
Unilever has had a dramatic past year, featuring three rejected bids to buy GSK's consumer health business, activist Nelson Peltz joining its board and Alan Jope, chief executive announcing his departure. At the end of last month, it named dairy executive Hein Schumacher as its incoming CEO.
Feeling The Squeeze
Schumacher faces a battle to revive Unilever's underperforming food business, while also managing tricky price negotiations with retailers feeling the squeeze from inflationary pressures and a cost of living crisis.
Underlying sales at Unilever rose 9.2% in the fourth quarter, beating company-provided analyst estimate of a 8.2% increase.