Consumer goods prices have moderated since January

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According to analysts, from January there were only minor price increases in all categories of the personal care segment, while in edible oils and some home care segments there was a price drop.

After three quarters of significant price increases taken by companies consuming soaps, detergents, cooking oils, biscuits and shampoos, the trend seems to have moderated since January.

Over the past three months, companies have limited price hikes and other interventions to offset rising inflation to certain storage units (SKUs) only.

The current fiscal year has seen unprecedented commodity price inflation, forcing FMCG players to raise prices throughout the year to offset rising commodity costs. Prices for soaps, detergents, cooking oils, cookies and shampoos rose 15-20% year-on-year in the first nine months of the year.

These increases had an impact on FMCG business volumes, as evidenced by the third quarter results. Volume growth of leading consumer goods company, Hindustan Unilever (HUL) maintained its positive momentum in the quarter ended December 2021 at 2%, but volume growth halved from the third quarter of Last year. HUL has been cautious in its price-raising strategy as it has lowered the weight of most products, rather than making strong price increases everywhere, which has had an impact on volumes.

FMCG companies have walked a tightrope over the past year balancing price increases with sustainable volumes and margins. However, commodity inflation was much higher than expected, but companies did not pass on the full increases for fear of losing demand and lowering trade.

Input costs were expected to cool in the first quarter of the following fiscal year, but the dispute between Russia and Ukraine dealt a further blow to already high commodity prices. According to analysts, while prices have started to calm down again after a big spike, they are still higher sequentially for commodities such as crude, palm oil, LAB and TIO2. However, companies have moderated price increases over the past three months to allow consumers to absorb all the increases so far, and in the hope that commodity prices stabilize.

According to analysts, from January there were only minor price increases in all categories of the personal care segment, while in edible oils and some home care segments there was a price drop.

Shampoos, along with oral care, have seen price increases over the past three months, while hair oils and cosmetics have remained relatively stable, according to a report from BNP Paribas. In the soap category, the median price increase was around 20%, with smaller competitors increasing their prices with a lag to market leader HUL. In the home care segment, there were price increases for detergents as well as surface cleaners. In the packaged food segment, higher prices for biscuits, with Britannia’s price increases outpacing those of Parle, while there were some price declines in the edible oils category.

Britannia has reduced the weight of the Tiger Rs 10 pack from 115g to 100g, representing an effective price increase of 15%. Parle also reduced the grammage for Rs5 pack from 65 gm to 55 gm; however, its grammage reduction in theThe Rs 10 pack is relatively lower.

In noodles, two big brands – Maggie and Yippee took price increases. Maggie took a significant price hike of 17% with the 70g pack costing Rs14 against12 earlier.

Edible oil prices have corrected slightly over the past three months as inflation slowed in September-October. However,

Detergents and toilet cleaners have seen a mixed impact from inflation over the past three months, with some categories seeing an increase and others seeing a reversal as well. HUL, for example, recently carried out a slight price correction in its detergent portfolio, possibly to revive volume growth, BNP Paribas analysts said. Household insecticides were not much affected due to raw material inflation and prices remained stable, while Godrej Consumer Products reversed some increases in electric refills for better market penetration.


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