On the one hand, the common consumer was happy when retail inflation came down to a year's low in December. On the other hand, FMCG companies making some major daily use items have again increased the burden on his pocket by increasing their products from 2% to 58% since January. This is the third major increase in a year by FMCG companies after a 3% to 20% hike in January 2022. Earlier in May 2022, due to increase in raw material prices, FMCG companies had increased the prices.
According to market data, in January, apart from Hindustan Unilever, Colgate, Palmolive, Mondelez India, which makes brands like Cadbury and Oreo, has increased the prices of its various products. These companies have also reduced the weight of many products. According to Pushan Sharma, director of rating agency Crisil, the growth of FMCG companies will be 7-9% in the current financial year and companies may increase prices to pass on the burden of input costs to customers.
Sales in the rural sector, which accounts for more than a third of FMCG companies' sales, have been slow for some time now and companies have had to work by reducing their margins. But now due to profit in farming, government incentives and good crop, companies are expecting an increase in rural demand this year. This is the reason why companies are increasing prices to bring back their margins.
The retail inflation (CPI) in the country saw a decline for the third consecutive month. Retail inflation has come down to 5.72% in the month of December. This is the lowest level in 12 months. Retail inflation stood at 5.88% in November. Whereas in October 2022, retail inflation was 6.77%. However, it is higher than in December 2021, when the retail inflation rate was 5.66%.