New Delhi : Leading consumer goods companies including Hindustan Unilever (HUL), ITC, Maruti Suzuki and Parle Products are seeing certain commodity prices see-sawing and industry executives fear it will have an impact on product pricing and demand recovery process of certain categories.
ITC in an investor presentation on Monday said while there is commodity price deflation on a yearon-year basis in the October-December quarter, there is a sequential uptick in certain commodities such as wheat, maida and sugar.
The country’s largest consumer goods manufacturer HUL said categories like health food drinks and coffee are reporting increased inflation impacting volume recovery, while tea consumers are downgrading due to the price difference between premium and plain tea. In contrast, the home care, beauty and personal care segments had improvement in volumes due to price reductions in the last few months. The company has termed this as an ‘inflation deflation cycle.’
Mayank Shah, senior category head at biscuit major Parle Products, said wheat prices hardened by 10-15% and sugar by 20-25% in the last 3-4 months due to shortages wiping out the gains from the steep 50% fall in edible oil prices. Due to this, the company is not able to pass on the full benefit of the dip in edible oil prices, he said. “Since these are agri-commodities, price movements like these can be cyclical depending on the crop output and external factors. For sugar, this kind of price movement is happening after 4-5 years while for wheat it is not very common due to the government’s minimum support price,” said Shah.
Ritesh Tiwari, HUL’s chief financial officer, told analysts earlier this month that the foods and refreshment business continued to see positive pricing with inflation in commodities like coffee and sugar. Carmakers and manufacturers of household appliances such as refrigerators, AC and washing machines said they are facing a 3-4% sequential increase in commodity costs such as steel, alumi nium, and polypropylene in the last 2-3 months. While this makes a case for a price hike, appliance manufacturers are absorbing it while carmakers are passing a portion to aid demand recovery.
