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FMCG Firms Halt Price Hikes Amid Falling Crude Oil
28 Jun
Summary
- FMCG companies are not implementing price hikes due to declining crude oil.
- GST changes in September enabled companies to pass benefits to consumers.
- Companies previously increased prices due to high raw material costs.
Fast-moving consumer goods (FMCG) companies are holding back planned price hikes as crude oil prices have fallen. This strategic pause aims to avoid derailing the volume growth witnessed in the sector. Companies had previously resorted to price increases to mitigate the impact of rising raw material expenses on their profit margins.
Following September's Goods and Services Tax (GST) changes, which allowed companies to pass benefits to consumers, the FMCG sector is experiencing a return to growth. With crude oil now trading below $80 per barrel, companies like Balaji Wafers and Parle Products have halted previously considered price adjustments, shifting from a 'wait-and-watch' mode to a more stable pricing strategy.
Despite easing crude oil prices, some commodity costs remain high due to hedging at earlier levels. Companies are still using these materials, leading to a cautious approach. While some price increases from earlier in the year are reflected in the market, the current trend indicates a stabilization, with firms no longer rushing to implement further price hikes.
