Soaps and Shampoos to Become Costly in 2012

By siliconindia   |   Monday, 09 January 2012, 23:11 IST   |    1 Comments
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Bangalore: Procter & Gamble (P&G) and Jyothy Laboratories, leading Fast Moving Consumer Goods (FMCG) companies in India, have escalated their prices in order to face rising commodity costs, reports Namrata Singh of Times News Network.

P&G and Jyothy Labs have increased their prices throughout their product-line, while Dabur, ITC and Godrej Consumer Products have not revised their product costs. Hindustan Unilever (HUL), on the other hand, has altered the prices of only its toilet soaps. However, industry analysts predict price up gradation an inevitable aspect of the Indian FMCG market. P&G has increased its FMCG prices by 5 to 10 percent, while a 5 to 7 percent rise is witnessed in the prices of Jyothy Laboratories products. According to Business Standard, prices of FMCG will increase by 5 to 10 percent in the financial year of 2012-13. The depreciating value of rupee is the driver of price rise in this regard.

Upsurge in FMCG prices can be attributed to increase in the cost of raw materials, especially that of palm oil, which is a key ingredient of soaps. Other factors contributing to the escalation of FMCG prices include – increased cost of packaging materials and depreciating value of the Indian rupee. Industry analysts say that escalation in price keeps value shares safe. Industry analysts also say that P&G’s price escalation brings the power of pricing back to the picture, especially with respect to feminine hygiene products and detergents. Feminine hygiene products section is an under-penetrated area, which can be developed upon. P&G can also derive the benefits of a lowered excise duty of 5 percent in feminine hygiene products, when compared to a duty of 10 percent on other FMCG products.

Despite the rate of food inflation being at a 4 year low of around 2 percent in December 2011, prices of pulses and edible oils have gone up as these items are mostly imported. According to Economic Times, food inflation was negative this year (-3.36 percent), as registered on 5th January, leading to a sharp dip in the prices of vegetables. Apart from pulses and oil seeds, prices of fast food items have also been raised to an extent. Companies like KFC and Pizza Hut have implemented price escalations in their menus. The companies not involving price increase in fast food products will have to reduce the quantity of food served in order to balance rising costs.



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