Lusting after shiny hair, a smooth shave, a happy baby and a sparkling home? Procter & Gamble can provide them all. But they cost more these days. The consumer products group managed to offset soaring commodity and energy costs in the year ending June 30 by pushing up prices and squeezing overheads. The company improved its operating margin by 50 basis points in the fourth quarter to post above-forecast earnings per share of $0.80 yesterday after stripping out the positive effect of tax changes.

Delivering more of the same will become increasingly challenging. Commodity costs are expected to rise by another $3bn in the coming year. Margins will be squeezed even with P&G's best efforts to push higher sales through the same fixed cost base and to trim its administrative and management operations. Input costs have risen in the current quarter while price rises across P&G's business will only start to be felt in the fall, suggesting a difficult first three months of this fiscal year.