If your household budget was stretched beyond your controls last year and you are hoping for some respite in 2022, the new year has surely arrived with some bad news. After reeling under the inflationary pressure for nearly one and half years, consumers in the country are going to be taken for another ride this year.
If early trends are something to go by, an all-round price hike is unfolding that is making all consumer goods items costlier by at least 3-5 per cent.
Take the daily essentials category, for instance. Basic packaged foods like biscuit, cake, bread and eggs have become dearer by 8-15 per cent in last three weeks. Fast moving consumer goods (FMCG) companies like Britannia, ITC, Parle Products and Hindustan Unilever (HUL) attributed it to the steady rise in agri-commodity prices, growing cost of logistics and packaging materials.
“In a situation like this (high commodity costs), there is no substitute for a price increase. So, we’ve gone ahead, and we’ve implemented pricing,” Varun Berry, managing director at Britannia Industries told investors in a recent call. The company is planning to hike prices by 6 per cent.
Following the traditional tact of repeatedly passing on additional costs to consumers, Britannia and others are reducing grammage (or pack sizes) apart from redesigning MRPs. “One third of our pricing is through MRP changes and two thirds is through grammage reduction”, Berry told investors.
Leading biscuits maker Parle Products, which had hiked prices by up to 10 per cent in last March, is set to raise MRPs by 5-10 per cent again for packs costing Rs 20 and above. And it will reduce pack sizes in below Rs 20 SKUs, or stock keeping units.
Country’s largest non-tobacco FMCG company and leading soaps and detergent maker HUL is affecting a calibrated price increase for its popular soap and detergent brands like Lux, Dove, Lifebuoy, Rin and Surf Excel. Industry estimates suggest, the Mumbai-based firm is hiking prices of Dove products by 12 per cent, for Lux its 10 per cent, while for Surf Excel bar consumers would now have to spend 20 per cent more.
Riding to get costlier, again!
Following the footsteps of its faster moving peers (FMCG), the automakers in the country are set for another round of price hikes in January. While revision in car prices in a new year is not uncommon, this year’s upward revision in prices is unique. Unlike other years, Maruti Suzuki - country’s leading car maker with over 40 per cent share of the passenger vehicle market - has announced another round of price hikes in January, even though it has raised prices at least thrice in the last 12 months.
Others like Kia Motors, Mahindra & Mahindra, Honda, Tata Motors, Volkswagen and Toyota, apart from luxury car makers like Mercedes Benz, Audi and Volvo, are set to hike prices of their models by 1-3.5 per cent. Which essentially means, car lovers would have to shell out at least Rs 8,000 to Rs 60,000 more for entry and mid-segment passenger vehicles.
There is no respite for cost sensitive riders, who prefer two-wheelers, either. From Eicher Motors to Hero MotoCorp, a bunch of leading two-wheeler makers are moving ahead with price hikes in January. Larger player Hero MotoCorp has already announced a Rs 2,000 increase in its entry-level models. While Eicher Motors, the makers of Royal Enfield bikes, is hiking prices of its popular models by Rs 3,000 to Rs 5,000.
Home appliances and electronics to pinch more
Since the pandemic hit the shores in early-2020, supply side disruptions, shortage of key components and rising ocean freight have kept the consumer electronics and durables on fire. Even after two years, though, buyers are at loss as manufacturers continue to increase prices of essential items like refrigerators, washing machines, microwaves and television sets.
According to apex industry body of manufacturers Consumer Electronics and Appliances Manufacturers Association (CEAMA), 5-7 per cent increase in prices across the portfolio is imminent.
"The industry had postponed the price increase due to the festive season. However, currently, manufacturers have no other option but to pass on the price hike to customers. We expect the industry to do a round of price hike from January to March in the range of 5-7 per cent,”, said Eric Braganza, President of CEAMA.
Popular brands like LG, Panasonic, Johnson Controls-Hitachi and Super Plastronics, among others, have already initiated the price increases. They are moving towards price hikes, in spite of 5-10 per cent price increases affected by most brands in last one year.
“We have tried best to absorb the same through cost innovations but prices need to increase for business sustainability,” said Deepak Bansal, Vice President, Home Appliances and Air Conditioner Business at LG Electronics India.
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