Everything from soap-biscuits to oil will be expensive: FMCG companies including Dabur, HUL will increase prices; Packaging and raw material costs increased

The biggest reason for concern for companies is the increasing instability in West Asia. The recent firing between Iran and America has increased fears regarding energy supply and crude oil prices.

Crude oil becoming expensive has a direct impact on transportation, packaging and chemicals. If this tension continues for a long time, the prices of petrol and diesel may increase, which will further increase the manufacturing and freight costs of FMCG companies.

Demand returned in rural areas, but pressure on margins

One good thing in the fourth quarter results was that there has been an improvement in demand in rural markets. After a long time, volume growth has increased from small towns and villages. But as soon as consumption started increasing, companies faced the crisis of raw materials. The prices of edible oil, milk and packaging materials have started increasing again, which is putting pressure on the profits of companies.

Big companies are preparing to increase prices

Not only Dabur, but the commentary of companies like Hindustan Unilever (HUL), Nestle India, Marico, ITC, Britannia and Godrej Consumer Products clearly shows that the industry is getting ready for difficult times.

Industry experts say that if the monsoon remains below average and the global situation does not improve, then there may be a significant increase in the monthly bills of households.

Threat of closure of Hormuz route

In the last quarter, the full impact of the Middle-East conflict and the closure of the Hormuz Route was not visible on the economy. But now its effect is becoming visible on the supply chain.

Freight transportation has become expensive. It is like a double whammy for the FMCG sector – on one hand the demand is increasing, on the other hand the cost is trying to control it.

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