NEW DELHI : Your daily consumption basket, including staples, packaged foods and household essentials, could become more expensive in the months ahead as rising fuel prices push up supply chain and input costs. The fuel price revision, amid the ongoing West Asia conflict, is expected to add fresh pressure on FMCG companies, prompting them to consider selective price hikes or grammage reductions, executives said.The fuel rate hike is likely to increase freight, distribution and input costs, further straining margins of companies already grappling with 8-10% inflation.
The development comes at a time when consumer demand had begun recovering following GST rate cuts last year, with major FMCG companies, such as Nestlé and Hindustan Unilever, reporting some of their strongestever fourth-quarter performances.So far, companies including Hindustan Unilever, Marico and Dabur have undertaken calibrated price hikes of 2-5% to partly offset input cost inflation, and are now evaluating further increases.Dabur India Global CEO Mohit Malhotra said: “We have already implemented a 4% price hike across different parts of the business and will have to look at another round of price increase, going forward. We are seeing an inflation of 10% hitting us this fiscal. We are also undertaking cost rationalisation initiatives.’’HUL and Britannia spoke about price hikes in their recent earnings call if inflationary pressures persist.“A price increase now appears imminent, though the quantum is still being evaluated,’’ Mayank Shah, chief marketing officer, Parle Products, said. “Volatility in crude prices continues to remain a key concern. We are closely monitoring the impact on freight and other input costs.’’The bigger concern is sustained crude volatility rather than a one-time hike, experts said.“If fuel prices remain elevated over multiple quarters, companies may eventually resort to calibrated price hikes or grammage reductions, which could weigh on consumption recovery, particularly in price-sensitive rural markets’’ says Naveen Malpani, partner and consumer & retail industry leader, Grant Thornton Bharat.“We are monitoring the developments very closely. Pricing is always our last lever,’’ Manish Tiwary, CMD, Nestle said.
