INSUBCONTINENT EXCLUSIVE:
Ukraine conflict to result in 10% higher prices for Indian consumersThe escalating Russia-Ukraine conflict has pressured fast-moving
consumer goods (FMCG) companies in India to consider another round of price hikes to offset an unprecedented rise in commodity prices such
as wheat, palm oil and packaging materials.The price of crude oil and a broad range of commodities have risen since Russia attacked Ukraine
on supply worries.India's inflation pressures were already rising even before Russia invaded Ukraine on February 24
Indeed, retail inflation for February rose above the Reserve Bank of India's upper-end target range of 2-6 per cent for the second straight
oil prices have risen sharply to above $100 a barrel, and FMCG firms predict a further rise in wheat, edible oil, and crude costs.Companies
such as Dabur and Parle are watching the situation and will undertake calibrated price increases to offset those inflationary
pressures.According to some media reports, makers such as Hindustan Unilever (HUL) and Nestle have increased the prices of food products
last week."We are expecting a 10-15 per cent hike by the industry," Parle Products Senior Category Head Mayank Shah told PTI.Mr Shah further
noted that the prices are witnessing high fluctuation, and hence it would be difficult to tell about the same increase due to volatility of
the price.The price of palm oil increased to Rs 180 per litre and has come down to Rs 150 per litre
Similarly, he added that crude oil prices had risen to nearly $140 a barrel and have now slipped $100 per barrel."However, it is still
higher than what it was earlier," Mr Shah said, adding that the companies are also hesitant in taking price increases significantly because
demand was reviving after COVID
They do not want to tinker with that.Last time, the makers did not take the price hike to mitigate the impact completely and absorbed some
part of that."Everybody is currently talking about a price hike of 10-15 per cent, although the input cost has gone much more than that," he
said.When asked whether Parle would also go for a hike, Shah said right now it has enough stock of packaging materials and other stocks and
would take a decision after a month or two on this.While expressing similar thoughts, Dabur India Chief Financial Officer Ankush Jain said
inflation remains unabated and is a cause of concern for the second year."The inflationary pressures and resultant price increases have led
to consumers tightening their purse-strings and relooking at discretionary purchases, while also downgrading to smaller packs
We are closely watching the situation and will undertake calibrated price increases to mitigate the inflationary pressures," he
said.Commenting on the current situation, Edelweiss Financial Services Executive Vice President Abneesh Roy said FMCG makers are passing
high inflation to consumers."FMCG companies like HUL Nestle have high pricing power
They are passing on inflation in Coffee and packaging materials
We expect all FMCG companies to take a further hike of 3 to 5 per cent in Q1FY23," he added.According to some news reports, FMCG major HUL
and Nestle have increased the prices of food items such as tea, coffee and noodles, passing off some burden to the consumers to maintain
margins.The reports had claimed that HUL had hiked prices of Bru coffee, Brooke Bond tea etc., as the company was facing inflationary
pressure.While Nestle India has increased the price of its famous Maggi noodles by 9 to 16 per cent, it has also taken a price hike for milk
and coffee powder, the reports added.An HUL spokesperson had said: "We are witnessing consumer volume titration due to the impact of high
In this environment, our priority is to provide value to consumers, invest behind our brands and protect our financial business model.""We
mitigate cost inflation first by driving our savings agenda harder, looking at all cost lines with a laser-sharp focus and removing any
non-value-adding cost," he said."Considering the inherent strength of our brands and our execution prowess, we have been able to provide the
right price-value equation to the consumer, thus helping protect our business model in a highly inflationary scenario," added the HUL
