Procter & Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL), Hershey's (NYSE:HSY), Kellogg (NYSE:K) Facing Shrinking Margins on Higher Commodity Prices

While companies producing most commodities will be sure to benefit from higher prices (for the most part) going forward, others like Procter & Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL), Hershey's (NYSE:HSY) and Kellogg (NYSE:K), will continue to have their margins pressured, as the weak economy will probably force them to eat the higher prices rather than pass them on to consumers.

All the above-mentioned companies have confirmed margins are under pressure, and some have already lowered their earnings guidance for 2011, such as Hershey's recently did because of rising sugar and cocoa prices.

Kellog on the other hand, has said they're going to increase prices in response to the higher input costs, but it will be done selectively.

Analysts are conflicted on the issue, as some say the increase in input costs haven't hurt the companies yet, but the fact that the major companies named above have all said their margins are under pressure somewhat undermines that argument.

Others think the rising costs aren't being taken seriously enough, and if more workers are higher, inputs will go beyond simply rising commodity prices, to overall input costs rising, putting even more pressure on margins and earnings.

But at this time it's the rising commodity prices that are the real threat, and in that regard, some analysts feel they're being underestimated as to the effects they'll have on companies, and either they'll have to raise prices in a weak economy or eat them. Either way it won't help their performance.

Kellog closed Friday at $53.42, gaining $0.90, or 1.71 percent. Hershey closed level at $50.49. Colgate-Palmolive ended the session at $76.24, up $0.31, or 0.41 percent. Procter & Gamble closed at $63.61, gaining $0.71, or 1.13 percent.