Q1 underlying sales growth 10.5 vs forecast 7.2
Q1 pricing up 10.7, volumes down 0.2
Shares up almost 2

LONDON, April 27 Reuters Unilever smashed quarterly sales forecasts on Thursday as another big rise in prices from the maker of Dove soap and Ben Jerry39;s ice cream triggered only a small dip in volumes, sending its shares up nearly 2 in early trade.

The 10.7 increase in prices was, however, lower than in recent quarters, adding to signs inflationary pressures might be easing as input costs declined.

Packaged goods companies have been hiking prices as they grapple with a surge in costs of everything from sunflower oil and shipping to packaging and grain.

Consumers have so far coped with the costofliving squeeze better than many analysts39; had expected, but some warn companies could eventually take a hit to margins if shoppers start switching to cheaper brands in greater numbers.

Unilever reported a 10.5 rise in underlying firstquarter sales to 14.8 billion euros 16.4 billion, beating analysts39; average forecast for a 7.2 increase, according to a companyprovided consensus.

That included a 10.7 increase in prices and a 0.2 dip in volumes. Price growth was slower versus the previous two quarters, and down from a record 13.3 reported in February, while the decline in volumes improved from the 3.6 drop posted at that time.

The expectation was that volumes were going to be down about 4 so that very slight decrease was very nice to see, Neil Denman, a fund…