“The hike in prices is being done for some time now. The industry has deferred the price hike due to the festive season. However, we expect prices to rise by around 5% this quarter due to increased commodity inflation,” said Eric Braganza, president, Consumer Electronics and Appliances Manufacturers Association. He added that the quantum of price hikes may vary. Because some companies have already raised prices while others are in the process of doing so.
Orient Electric Ltd, a maker of cooling devices such as fans, coolers and kitchen appliances, said commodity prices have been uncertain in the last 18 months.
Orient Electric’s Business Head (Home Appliances) Salil Kapoor said the prices of commodities like plastic, steel and copper have risen. He added that the company is likely to increase prices by 4-7% in the product portfolio this quarter. “The freight cost has gone up. There is no other way but to deliver it to the consumers. We had increased the cost earlier also; It will happen again this quarter,” Kapoor said.
Companies had earlier raised prices of home appliance brands by between 5 and 15%, which, Kapoor said, has dented demand.
Meanwhile, biscuit maker Britannia Industries Ltd is preparing for 10% growth this quarter, managing director Varun Berry told analysts late last month. According to the company, the prices of wheat, sugar, palm oil remain bullish.
The maker of Good Day Biscuits and Britannia Cakes increased product prices by 1% in the first quarter of the fiscal, 4% in the second quarter and another 8% in the third quarter.
Inflation pressures have intensified since early 2021 as demand for goods and commodities pick up after the reopening of economies around the world following the Covid-induced lockdowns.
In India, the Wholesale Price Index (WPI) saw a sharp rise in the nine months to December, according to government data. This was due to a pick-up in economic activity, a sharp rise in global prices of crude oil and other imported inputs, and higher freight costs.
For companies that sell small packaged goods of daily use with little room to raise prices, this means implementing cost-control measures and increasing prices along with cutting grammar.
Dabur India Chief Executive Officer Mohit Malhotra said in an earnings call last week that the company has hiked prices of several products to offset inflation.
On its healthcare portfolio, it increased the prices of products such as Honeytus, Pudin Hara and Chyawanprash by 10%.
“We have taken a second round of price increases in the third quarter – this will have a through-flow effect, which will happen in the fourth quarter,” Malhotra said on February 3.
Dabur is working on a mix of its cost-savings program Prosperity, taking selective price hikes as well as distribution expansion to counter the high cost of raw materials. “So, the company may have to take more price hikes. We are conscious of the elasticity of demand at play here with the rise in prices,” he said.
The local unit of L’Oreal, the world’s largest beauty products company, said the prices of items used to make plastic bottles, especially those linked to petrochemicals, were very high.
“Whatever is related to petrochemicals is getting tougher. So, we haven’t seen a single major component softening. The inflationary trend continues, and this is a cause for concern. Since there is a limit to what you can give to the consumer, companies also have to tighten their belts and budget. The first round of pricing took place at the end of last year, and the second round of pricing will happen in the middle of this year,” said Amit Jain, Managing Director, L’Oreal India.
He said the price hikes were in the “mid-single digits” in the beauty and personals category.
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