Price rise across spectrum set to pinch middle class
KOLKATA/MUMBAI: With the rupee plumbing new depths against the dollar and pound, officials at consumer goods companies and retailers said a fresh round of price hikes was imminent.
Starting September, prices of a wide array of imported and premium consumer goods, including imported chocolates, olive oil, personal care and cosmetics, foreign apparel, electronics, mobile phones and laptops, are set to go up between 4% and 15%, a development that could impact already bleak consumer sentiments during the upcoming festive season.
Imported products are not the only ones set to become costlier. Even domestic FMCG companies are set to hike prices.
Electronics Goods, Personal Care Items to Cost More
Officials at companies like Dabur BSE -3.39 % and Cargill said prices of products such as edible oil and juice are likely to go up as imported raw materials had become more expensive.
The companies said they had benchmarked their current prices assuming an exchange rate of 58-59 against the dollar when they last increased prices in July. The rupee on Tuesday touched record lows against the dollar and pound, closing at 64.13 and 100.35, respectively. It closed against the euro at 85.
"It has become extremely tough to hold on to prices because it's completely eroding margins," says Panasonic India MD Manish Sharma.
"The way product price is going up, it will hit India's consumption cycle badly," says Rajesh Shukla, consumer economy expert and a professor at the Institute of Human Development. "Demand for aspirational products, high-value FMCG and even high-value food such as protein will take a hit," he said.
Starting September, prices of a wide array of imported and premium consumer goods, including imported chocolates, olive oil, personal care and cosmetics, foreign apparel, electronics, mobile phones and laptops, are set to go up between 4% and 15%, a development that could impact already bleak consumer sentiments during the upcoming festive season.
Imported products are not the only ones set to become costlier. Even domestic FMCG companies are set to hike prices.
Electronics Goods, Personal Care Items to Cost More
Officials at companies like Dabur BSE -3.39 % and Cargill said prices of products such as edible oil and juice are likely to go up as imported raw materials had become more expensive.
The companies said they had benchmarked their current prices assuming an exchange rate of 58-59 against the dollar when they last increased prices in July. The rupee on Tuesday touched record lows against the dollar and pound, closing at 64.13 and 100.35, respectively. It closed against the euro at 85.
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The country's four leading consumer electronic makers - LG, Samsung, Panasonic and Videocon BSE 1.11 % - said they may soon announce a 2-4% price hike that could come into effect as early as next month. Prices of refrigerators, washing machines, LED and LCD television sets, and microwave ovens had gone up 3-5% last month when the rupee had crossed the 59-60 range. In all, the likely September increases will be the third price hike this year due to rupee depreciation.
"It has become extremely tough to hold on to prices because it's completely eroding margins," says Panasonic India MD Manish Sharma.
"The way product price is going up, it will hit India's consumption cycle badly," says Rajesh Shukla, consumer economy expert and a professor at the Institute of Human Development. "Demand for aspirational products, high-value FMCG and even high-value food such as protein will take a hit," he said.
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