PremiumRetail prices of biscuits, beauty products and home appliances are among a host of consumer goods set to face another round of price increase this quarter as companies battle sustained high commodity costs and margin pressures
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NEW DELHI : Retail prices of biscuits, beauty products and home appliances are among a host of consumer goods set to face another round of price increase this quarter as companies battle sustained high commodity costs and margin pressures.
“The price hike has been due for some time now. The industry postponed price increases due to the festive season. However, we expect prices to be hiked around 5% this quarter due to a rise in commodity inflation," said Eric Braganza, president, Consumer Electronics and Appliances Manufacturers Association. He said the quantum of the price hike could vary as some companies have already raised prices while others are in the process of doing so.
Orient Electric Ltd, a maker of cooling devices such as fans and coolers and kitchen appliances, said commodity prices have been erratic over the past 18 months.
There has been a surge in prices of commodities such as plastics, steel and copper, said Salil Kappoor, business head, home appliances, Orient Electric. He said the company could raise prices by 4-7% this quarter across the product portfolio. “Freight costs have gone up. There is no other way but to pass it on to consumers. We did a cost increase earlier as well; it will happen again in this quarter," Kappoor said.
Companies had earlier raised prices of home appliances brands between 5 and 15%, which Kappoor said, has led to a contraction in demand.
Meanwhile, biscuit maker Britannia Industries Ltd is preparing a price increase of 10% this quarter, Varun Berry, managing director, told analysts late last month. Wheat, sugar, palm oil prices are continuing to trend higher, according to the company.
The maker of Good Day biscuits and Britannia cakes raised product prices by 1% in the first quarter of the fiscal, 4% in the second quarter and another 8% in the third quarter.
Inflationary pressures have intensified since the beginning of 2021 as demand for goods and commodities surged following a reopening of economies worldwide after the covid-induced lockdowns.
In India, the Wholesale Price Index (WPI) saw a sharp uptick in the nine months to December, according to government data. This was attributable to the pick-up in economic activity, a sharp increase in global prices of crude oil and other imported inputs, and high freight costs.
For companies that sell smaller packaged goods of daily use with little headroom for raising prices, this has meant implementing steep cost-control measures and taking price increases along with grammage cuts.
In an earnings call last week, Mohit Malhotra, chief executive officer, Dabur India, said the company took price hikes across a range of products to offset inflation.
On its healthcare portfolio, it increased prices of products by 10% Prices of products such as Honitus, Pudin Hara and Chyawanprash were raised.
“We’ve taken the second round of price increase in the third quarter—there’ll be a flow-through impact, which will happen in the fourth quarter," Malhotra said on 3 February.
Dabur is working on a mix of its cost-savings programme Samriddhi, taking select price hikes as well as distribution expansion to counter higher raw material costs. “So, the company may have to take more price increases. We are mindful of the elasticity of demand playing out here with the price increase," he said.
The local arm of the world’s largest beauty products company L’Oreal said commodity prices, especially those linked to petrochemicals, used to make plastic bottles remain stubbornly high.
“Anything which is related to petrochemicals is hardening. So, we haven’t seen a single major ingredient softening. The inflationary trend is continuing, and it is a cause of concern. Because there is a limit to what you can pass to the consumer, companies also have to tighten their belts and budgets. The first round of pricing happened late last year, and the second round of pricing will happen mid this year," said Amit Jain, managing director of L’Oreal India.
He said price hikes in the beauty and personal category were taken in the “mid-single digits".
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