Further price hikes likely in food, personal care products as raw material costs rise: Report
New Delhi, May 28
Prices of essential everyday consumer products are likely to rise further in the near term as companies continue to face inflationary pressure on raw materials, according to a report by Systematix Research.
The report stated that companies across categories have already increased product prices by 3-7 per cent on average over the last one to two months as raw material basket costs increased by around 8-10 per cent on average.
According to the report, further price hikes and grammage cuts are highly likely in food and beverage (F&B) as well as home and personal care (HPC) products as companies attempt to offset higher input costs.
It stated, "We believe further price hikes/ grammage cuts are highly likely near-term in F&B/ HPC products as companies scramble to offset the inflationary impact with a combination of pricing, mix and cost savings".
The report noted that pricing growth is expected to become a larger contributor to revenue growth of consumer staple companies during the first half of FY27, with pricing and volume contribution likely to remain around 50:50.
However, it also cautioned that rising retail inflation could impact consumption volumes in the coming months.
Systematix Research said that while recent price hikes may help companies protect their absolute gross profits, the pressure on gross margins is expected to continue during the first half of FY27.
The report added that this could create concerns around the overall margin outlook for FY27.
The report also highlighted that costs have sharply increased in certain categories, especially palm oil and crude-linked inputs.
Palm oil prices rose 11 per cent, while Brent crude oil prices surged 32 per cent amid the ongoing West Asia conflict.
The report also noted a sharp rise in packaging costs, with HDPE (High-Density Polyethylene) prices increasing 56 per cent.
HDPE (High-Density Polyethylene) prices represent the market cost of a highly durable, petroleum-derived thermoplastic polymer. It is one of the most widely used plastics in the world, serving as a critical raw material for manufacturing shampoo bottles, detergent containers, jerry cans, bottle caps, and flexible packaging within the Food & Beverage (F&B) and Home & Personal Care (HPC) sectors.
According to the report, part of the sharp raw material inflation was already visible during the March quarter, as gross margins of major companies under its coverage contracted by around 50 basis points year-on-year and around 30 basis points quarter-on-quarter during the fourth quarter of FY26.
The report said most of the impact from the current cost inflation is expected to be reflected during the first half of FY27.
It added that companies are likely to continue using a mix of price hikes, grammage reduction and operational efficiencies to manage profitability amid elevated input costs.
— ANI
Reader Comments
It's a circular problem - global conflicts drive up crude, that drives up packaging and transport, companies pass it to us, and then we end up spending more on basics like *shampoo* and *dal*. The report says margins are squeezed, but for the common man, the real squeeze is on the monthly budget. 👎
I've lived in three countries now, and India has some of the most resilient consumers. But even resilience has its limits. If companies keep increasing prices and cutting grammage, eventually people will just stop buying the branded stuff. The *local* *kirana* alternatives are already looking better!
While these price hikes are painful, at least the report is honest about something: companies are trying to protect gross profits. But a 56% increase in HDPE packaging costs is insane! That's not a small fluctuation. Something is fundamentally broken in the supply chain if basic plastic for bottles and containers costs that much. Need better domestic sourcing for sure. 🧐
This is the kind of news that makes you rethink your entire spending pattern. When even basic *atta*, oil, and soap get expensive, the middle class really feels the pinch. I wish the report had suggestions on what consumers can do - beyond just tightening belts. Maybe time to switch to local brands or bulk-buy during sales?
Honestly, it's a mixed bag. I appreciate the transparency from the report, but it feels like the only
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