Consumers may now have to shell out more for everyday use products. FMCG companies are preparing to increase the prices of their products due to the rise in prices of commodities like wheat, palm oil and packaging goods.
Apart from this, FMCG companies have also suffered due to the Russo-Ukraine war. They believe that due to this, there will be a jump in the prices of wheat, edible oil and crude oil. Companies like Dabur and Parle are watching the situation and will take careful steps to deal with inflationary pressures. Hindustan Unilever and Nestle have increased the prices of their food products last week.
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Mayank Shah, Senior Category Head, Parle Products, said, “We are expecting 10 to 15 per cent increase in prices by the industry. He said that there is a lot of volatility in the prices. In such a situation, it is difficult to say so far how much the price increase will be. He told that the price of palm oil had gone up to Rs 180 a litre. Now it has come down to Rs 150 a liter. Similarly, after going to $140 per barrel, the price of crude oil has come down below $ 100.
Shah said, however, that the prices are still higher than before. Edelweiss Financial Services Executive Vice President Abneesh Roy said FMCG companies are passing the burden of inflation on to consumers. “Hindustan Unilever and Nestle have the power to set higher prices,” he said. They are passing on the burden of price hike of coffee and packaging goods to the customers. We expect all FMCG companies to increase prices by three to five per cent in the first quarter of 2022-23.
Consumers buying small packs to reduce expenses
Ankush Jain, Chief Financial Officer, Dabur India, said inflation continued to remain high and it is a cause for concern for the second year in a row. “Consumers have reduced their spending due to inflationary pressures,” he said. They are buying smaller packs. We are watching the situation and after due deliberation, we will take measures to avoid inflationary pressures.
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Mayank Shah, Senior Category Head, Parle Products, said that last time FMCG companies did not completely pass on the burden of increase in commodity prices to the customers. Shah said, now everyone is talking about 10-15 per cent growth. However, the cost of production has gone up considerably. A decision on price hike will be taken in a month or two.