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Price Hike Pause: Firms Fear GST Scrutiny
23 Nov
Summary
- Companies hesitate to raise prices due to fear of profiteering scrutiny.
- Automakers may defer usual January price adjustments this year.
- Consumer electronics firms absorb rising costs rather than increasing prices.
Major consumer goods manufacturers are pausing typical price hikes amidst rising raw material costs, a move driven by apprehension over potential government scrutiny for profiteering post-GST reductions. Companies in sectors such as soaps, biscuits, detergents, automobiles, and consumer electronics are seeking clarity from authorities. This cautious approach means industries like automotive, which normally adjusts prices in January, might delay hikes due to increased costs from imported components and a depreciating rupee.
Leading electronics firms, including LG, are currently absorbing increased expenses for products like televisions and air conditioners, despite significant rises in global memory chip prices and upcoming energy efficiency regulations. Similarly, biscuit manufacturers are reportedly avoiding price changes until at least March 2026 to support government initiatives for consumption growth. Even with strong demand and product waiting periods, automakers are holding back on increasing sticker prices after discontinuing festive discounts.
In categories unaffected by GST cuts, such as detergents and cosmetics, companies remain cautious about price adjustments. Industry executives note that while these sectors can absorb short-term cost pressures, maintaining consumer trust and habit is prioritized over passing on every fluctuation. Nestle, for instance, has implemented only minor price increases on packed yogurt in select cities where GST remains unchanged, reflecting a measured strategy.
