Your household shopping bill may not come down soon
Raw material prices are also starting to show initial signs of inflation after moderating previously, indicating price increases in some categories could be in the offing.
Most consumer goods companies raised prices by more than a quarter in the past two years to offset rising costs under heads such as raw materials, supply chain and energy.
Cost inflation began with the pandemic and exacerbated following Russia's invasion of Ukraine. Crude, palm oil, LAB and coffee prices recorded increases compared to a quarter and a year earlier while prices of cocoa, coffee and sugar rose sharply.
«We have to accept the fact that the current product prices are the new normal. While prices of some raw materials are down, we still see pressure on input costs especially in the food segment. Prices of products will either remain stable and in some cases go up, but chances of further price-cuts are unlikely,» said Krishnarao Buddha, senior category head for marketing at Parle Products, India's biggest foods company.
According to Boston Consulting Group, prices of household care products, foods and beverages more than doubled in the past 10 years, but the increase was steeper post Covid.
As raw material prices deflated over the past year, companies had largely retained the benefits through margin expansion, said analysts. BNP Paribas in a recent report said considering the competitive intensity, pressure on volumes and strong gross margins, companies would be reluctant to hike prices in the near term.
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