The report said the latest fuel price revision is expected to increase logistics, distribution and raw material costs for fast-moving consumer goods (FMCG) companies already dealing with 8-10% inflationary pressures.
The development comes just as consumer demand had started showing signs of recovery after last year’s GST rate cuts, with companies such as Nestlé India and Hindustan Unilever reporting strong fourth-quarter earnings.
Several companies, including Marico and Dabur India, have already implemented calibrated price hikes of 2-5% to offset rising costs and are evaluating further increases, the report said.
“We have already implemented a 4% price hike across different parts of the business and will have to look at another round of price increase going forward,” Dabur India Global CEO Mohit Malhotra told the newspaper, adding that the company expects inflation of around 10% this fiscal year.
Executives at Britannia Industries and Hindustan Unilever also indicated during recent earnings calls that further price hikes may be considered if inflationary pressures persist.
“A price increase now appears imminent, though the quantum is still being evaluated,” Mayank Shah, chief marketing officer at Parle Products, was quoted as saying in the report.Industry experts told the newspaper that prolonged crude oil volatility, rather than a one-time fuel increase, poses the larger risk for consumption demand, particularly in rural markets.
“If fuel prices remain elevated over multiple quarters, companies may eventually resort to calibrated price hikes or grammage reductions, which could weigh on consumption recovery,” Naveen Malpani, partner and consumer & retail industry leader at Grant Thornton Bharat, told the publication.
“We are monitoring the developments very closely. Pricing is always our last lever,” Manish Tiwary, managing director of Nestlé India, said, according to the report.