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Informist, Thursday, Apr. 2, 2026

 

By Avishek Rakshit & Sunil Raghu

 

KOLKATA/AHMEDABAD - Faced with a surge in input costs, including packaging costs, fast-moving consumer goods companies are set to raise prices between 2% and 5?pending on the product and the pack size. The price hike may either cut product volume sold to the consumer or actually increase the prices while keeping the product volume constant, industry officials said.

 

The war in West Asia has led to a 50% plus increase in crude oil prices as well as prices of polymers and petrochemical products. Such petrochemical products are also in short supply, industry officials said. "Prices of plastics has (have) risen sharply by 30%-40% in March owing to rising crude oil costs. Costs of key raw materials like polypropylene and high-density polyethylene have risen to INR 100 – INR 120 a kg and low-density polyethylene costs have also risen to INR 200 a kg from around INR 140 per kg," an industry official with an Indian consumer goods company said.

 

Packaging costs vary widely in accordance with the product and pack size in the consumer goods industry. It is as low as 10% for larger pack sizes of dry foods such as biscuits and as high as 40% in similar smaller food packs. Packaging costs as a percentage of total manufacturing cost hover around 20% for personal care products which mostly use polyethylene terephthalate. The procurement cost of the latter has increased by over 20% and is INR 90-INR 130 a kg depending on the quality and manufacturer.

 

"Overall, packaging costs as a percentage of total costs for the industry should hover around 10%-15?pending on the company," a second industry official with a domestic fast-moving consumer goods company focussed on personal care said.

 

Industry officials said that prices of some products have been raised during Feb-Mar by 1%-4?pending on the product and the stock keeping unit, but that hike is not enough to fend off the rise in input costs.

 

Prices of palm oil - one of the important raw materials for the consumer goods industry in India - surged to their highest levels since December 2024 to above 4,850 ringitts, or about INR 111,814 per tonne, industry officials said. Palm oil is used to manufacture food products and also in the personal care space. Prices have risen on account of Indonesia's plans to increase its biodiesel blending to 50% from July this year, which restricts it global availability. Like India, Indonesia too is raising the percentage of mixing palm oil with diesel and cut down its petroleum crude oil import bill. With higher percentage of palm oil being used as transportation fuel, its availability for exports too would get restricted.

 

Industry officials said the war in West Asia led to a sharp increase in prices of crude oil and this in turn led to higher demand for biofuel in South-East Asia, which has raised the price of palm oil.

 

"Another round (of price hike) in the range of 2%-5% is most likely to happen in April-June to pass on increased manufacturing costs. But judicious decision needs to be taken considering the demand conditions," the second industry official said.

 

According to a report from brokerage firm Nomura, as on March-end, urban demand, which makes up for over 50% of the total sales in the consumer goods universe, has not shown any signs of improvement on a sequential basis. In fact, the brokerage is of the view that there has been some moderation in urban demand towards the fag-end of March.

 

Demand from rural areas, which roughly accounts for 45% of the total consumer goods sales in the country, is expected to see some negative impact Apr-Jul onwards, Nomura said in a report.

 

Industry officials said consumer goods companies are caught in a dilemma -- an increase in prices will further dampen an already-muted demand, and no price increase will hit profitability and margins.

 

Hence, consumer goods companies are likely to increase prices while keeping the volume same for mid- and larger packs while reducing the volume in smaller packs to keep the effective price the same.

 

"INR 5, INR 10, and INR 20 are very sensitive price points for consumers and any increase in these packs will destabilise demand conditions," the second industry official said.

 

CONSUMER DURABLES

The consumer durables industry is also feeling the heat of higher petrochemicals costs. Thermoplastics and engineering plastics like acrylonitrile butadiene styrene, polypropylene, polycarbonate, and high-density polyethylene are widely used by appliance makers for their strength, versatility, and cost-effectiveness. However, the costs of these input materials have been on the rise.

 

Industry officials said that prices of acrylonitrile butadiene styrene have risen by around 10% in March to INR 130,000 to INR 170,000 a tonne and polypropylene prices rose by INR 3,000-INR 5,000 per tonne to INR 105,000-INR 128,000 per tonne in March.

 

Officials from the consumer durables industry are contemplating a price hike anywhere between 3% and 10?pending on the product to stave off mounting costs.

 

"It is an evolving situation. Prices of oil and raw material have gone up by 5%-20% in varying degree. However, we have decent raw material and finished goods stock at old prices and have pre-contracted rate for some raw material. So, it is work in progress," said Nrupesh Shah, managing director of corporate affairs at Symphony Ltd., the biggest player in India's organised room, commercial and industrial air coolers market. "We would take the call on prices in the days to come, once summer sets in properly."

 

Although Shah refrained from commenting on the extent of the price hike, industry officials see the hike varying from product to product. For instance, washing machines, which have higher plastic components as compared to a refrigerator, are expected to see a price hike of 8-10% in the coming days. Air conditioners are also expected to witness a similar hike and refrigerators may see a price increase of 4%-5%.  End

 

Edited by Ashish Shirke

 

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