Written bySiddhant Pandey
While we look forward to the new year, we're afraid there's already some bad news.
Even though demand suffered amid an economic slowdown, your daily essentials are expected to get costlier next year.
Despite a cut in corporate tax, fast-moving consumer goods (FMCG) companies indicated a hike in prices, citing input cost pressures.
Hence, you may find yourself paying more for some essential products.
Leading dairy manufacturer Amul has already increased prices by Rs. 2/L across states while Mother Dairy, another industry leader, raised prices by Rs. 3/L in Delhi-NCR.
The price hike comes as the cost of cattle feed has gone up and milk availability has been short across states due to an extended monsoon and delayed flush season in milk production.
The All India Bread Manufacturers Association has warned of a 7-12% price hike over the next two weeks if the rising input costs aren't pruned. According to CNBC TV18, small and medium manufacturers may be the first to give in and increase prices.
Come 2020, you may have to start spending 3-6% more on biscuits.
FMCG companies say that this price hike is due to a 12-20% increase in the cost of raw materials such as wheat flour, edible oil, and sugar.
Reportedly, companies like Nestle, ITC, Parle are contemplating reducing the size of packaging instead of increasing prices.
Since March, onion prices have surged 400% as 75% of the monsoon crop was destroyed due to unseasonal rainfall, Consumer Affairs Minister Ram Vilas Paswan said.
Other factors such as storage and transportation costs also contributed to the steep price rise.
Market watchers say these prices are unlikely to stabilize for at least the next two months until onion imports create a significant impact.
As mentioned earlier, there has been an increase in edible oil's prices. In the past two months, palm oil prices have also increased by 35%.
Despite a recent price hike by edible oil companies, without a cut down on input costs, we may witness another increase in prices soon—perhaps even as soon as 2-3 weeks, conjectured CNBC TV18.
The palm oil price hike is also expected to influence the cost of soaps and other personal care items. Similarly, there is also pressure on the cost of instant noodles, snacks, frozen food, cakes, ready-to-eat items, etc.
The FMCG market has overall taken a hit with growth falling to 7.3% in the last quarter, according to market tracker Nielsen. It's expected to fall further down to 6.5-7.5% in the October-December quarter.
This compares poorly against the 16.2% year-on-year growth during July-September 2018.
However, FMCG companies remain confident of recovery from these "short term hiccups" next year.
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