Indian companies are about to raise prices
India’s largest consumer companies are gearing to raise prices on products from toothpaste to tires and paint ahead of the festival season and for the
India’s largest consumer companies are gearing to raise prices on products from toothpaste to tires and paint ahead of the festival season and for the second straight quarter, as the prolonged Middle East conflict drives up commodity costs and threatens to keep inflation elevated.Hindustan Unilever Ltd. will have measured price increases over the coming quarter in categories including detergents and dishwashing bars. At least seven other companies, from Dodla Dairy Ltd. and Asian Paints Ltd., also plan to raise prices, according to their post-earnings calls and media briefings.“Given the external volatility, we continue to see inflation in crude-linked derivatives and are taking calibrated price increases across the segment” for home care products, India’s largest consumer goods firm Hindustan Unilever Chief Financial Officer Niranjan Gupta told analysts this week.Consumer prices rose above the Reserve Bank of India’s 4% target for the first time in nearly a year and a half in June as food and fuel costs climbed. Though the gauge remained within the central bank’s 2%-6% tolerance band, price pressures are expected to intensify in the coming months as companies raise prices and a deficient monsoon raises the risk of higher food prices.
The RBI expects inflation to average 5.1% in the fiscal year ending March 2027.Also read | Extreme heat can erase hundreds of thousands of jobs in India's cities by 2050: World BankThe persistently high energy costs in the wake of the Iran war means no quick relief is expected anytime soon. With the US-Iran fight flaring up again, companies are planning a second round of price hikes for everything from home appliances to kitchen staples. Havells India Ltd. has raised prices by as much as 8%, while salt from Tata Consumer Products Ltd. is pricier by about 7%.132781703The latest price increases coincide with the incoming local festival season, which typically runs from August to November. This is also when consumer spending typically surges, especially during the Hindu festival of lights, Diwali. The period accounts for nearly a third of annual sales for many companies, raising the likelihood that stronger demand will allow business to pass on higher costs.The price increases will test not just the strength of India’s consumption demand but also its policymakers as they watch inflation pressures closely.Ministry’s WarningThe Reserve Bank of India bank has said it would respond only if inflationary pressures become more broad-based.
India’s finance ministry warned Wednesday that price pressures are spreading beyond food, with higher global fuel costs and unfavorable weather feeding through to a wider range of consumer prices.The central bank has kept interest rates unchanged this year and is widely expected to do so again when its si member monetary policy committee meets Aug. 3-5. Economists say the trajectory will depend on whether geopolitical tensions keep oil prices elevated and whether the monsoon damages the summer-sown crop harvest.Also read | Unfazed by West Asia crisis, fiscal deficit within range at 18.2% in Q1“Some price pass-through is inevitable, given the magnitude of input cost pressure and margin pressure on firms,” said Sonal Varma, chief economist for Asia e Japan at Nomura Holdings Inc.132781707Demand has so far been stable across rural and urban India, according to company commentary. A Retailers Association of India survey showed retail sales grew 6% from a year earlier in June, higher than May.“We are in a comfort zone at the moment,” said Arvind Singhal, chairman of consultancy The Knowledge Company.
The BriefWire