Expenses of FMCG companies increased as petrol and diesel became costlier by ₹ 3, signs of costliness ranging from soap-biscuits to everyday items.

Tezzbuzz Desk- The ongoing tension in West Asia may now affect the pockets of common people as well. Due to rising prices of crude oil and cost of petrol and diesel, packaged food items, everyday items and household products may become expensive in the coming months. Rising transport and raw material costs have increased the concern of FMCG companies.

According to reports, the recent surge in fuel prices is directly impacting fast-moving consumer goods (FMCG) companies. The costs of freight, distribution and packaging are continuously increasing. Companies are already facing the pressure of 8-10 percent inflation.

Demand was improving after GST cut

After the cut in GST rates last year, there was an improvement in consumer demand in the market. The effect of this was that big companies like Nestlé India and Hindustan Unilever had recorded strong earnings in the fourth quarter. But now rising fuel prices may affect this recovery.

Dabur and Marico increased prices

According to the report, companies like Dabur India and Marico have increased the prices of many products by 2 to 5 percent due to increase in costs. Dabur India Global CEO Mohit Malhotra said the company has already increased prices by about 4 per cent across different segments of the business and further new increases can be considered.

Britannia and HUL also indicated

Executives of Britannia Industries and Hindustan Unilever have also indicated in their recent earnings calls that if inflationary pressure continues, the companies may have to increase prices further. According to Mayank Shah, Chief Marketing Officer, Parle Products, the price increase is considered almost certain, although its quantum is still under discussion.

There can be a big impact on rural markets

Industry experts believe that if crude oil prices continue to fluctuate for a long time, its biggest impact will be on rural markets. Demand there is already weak and rising inflation may affect the purchasing power of consumers.

Companies can reduce the quantity of products

According to Naveen Malpani, partner, Grant Thornton India, if fuel prices remain high for a long time, companies can reduce the quantity of products i.e. grammage along with increasing the prices. With this, consumers can get goods in smaller quantities at the same price.

Nestlé India MD Manish Tiwari said that the company is continuously monitoring the situation. He said that changing the prices of products is always the last option of the company.