Analysts say there have been only minor price increases in all categories in the personal care segment as of January, while the edible oil and some home care segments have seen price cuts.

After three quarters of significant price increases by consumer companies in soaps, detergents, edible oils, biscuits and shampoo, the trend seems to have moderated since January.

Over the past three months, companies have limited price increases and other interventions to offset rising inflation to select inventory units (SKUs) only.

The current fiscal year has witnessed unprecedented commodity price inflation, forcing FMCG players to raise prices throughout the year to offset rising commodity costs. Prices of soaps, detergents, edible oils, biscuits and shampoo have risen 15-20% year-on-year in the first nine months of the year.

These increases have impacted volumes for FMCG businesses, as evidenced by the third quarter results. Volume growth of the main consumer goods company, Hindustan Unilever (HUL), maintained its positive momentum in the quarter ended December 2021 at 2%, but volume growth halved compared to the third quarter last year. HUL was cautious in its price increase strategy as it reduced the grammage of most products, rather than driving steep price increases everywhere, impacting volumes.

FMCG companies have been in tight control over the past year as they balance price gains with continued volumes and margins. Commodity inflation, however, was much higher than expected, but companies have not passed on the full gains for fear of losing on-demand and downside trading.

Input costs were expected to decline in the first quarter of next fiscal year, but the conflict between Russia and Ukraine has dealt a further blow to already high raw material prices. According to analysts, while prices have cooled off from a major spike, they are still sequentially higher for commodities such as crude oil, palm oil, LAB and TIO2. However, companies have moderated price increases in the past three months to allow consumers to absorb any gains so far, in hopes that commodity prices will stabilize.

Analysts say there have been only minor price increases in all categories in the personal care segment as of January, while the edible oil and some home care segments have seen price cuts.

Shampoos and oral care have seen price increases in the past three months, while hair oils and cosmetics have remained relatively stable, according to a report by BNP Paribas. In the soaps category, the median price increase was about 20%, with smaller competitors raising prices with some lag compared to market leader HUL. In the home care segment, there have been price increases for both detergents and surface cleaners. In the packaged food segment, there were price increases for biscuits, with Britannia’s price increases higher than Parle’s, while there were some price reductions in the edible oil category.

Britannia has reduced the grammage of Tiger Rs 10 pack from 115 grams to 100 grams, which is an effective 15% price increase. Parle has also reduced the grammage for an Rs5 pack from 65g to 55g; however, the gram reduction in the Rs 10 package is comparatively lower.

In noodles, two big brands – Maggie and Yippee have made price increases. Maggie has made a significant price increase of 17%, with the 70 gram pack previously costing 14 rupees against 12 dollars.

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

Detergents and toilet cleaners have had a mixed effect of inflation in the past three months, with some categories seeing an increase and some also a reversal of the trend. For example, HUL recently made a small price correction in its detergent portfolio, possibly to drive volume growth, analysts at BNP Paribas said. Home use insecticides have not suffered much from commodity inflation, and prices have remained stable, while Godrej Consumer Products has reversed some increases in electrical refills for better market penetration.

This post Consumer goods prices moderate since January

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