Cost pressures stoke fresh demand worries for India Inc

CORPORATE INDIA IS preparing for another bout of inflationary pressure after the government’s latest increase in petrol and diesel prices, a move industry executives fear will sharply raise freight and logistics costs at a time when companies are already struggling with elevated packaging expenses linked to the Iran war.

- VIVEAT SUSAN PINTO & AKBAR MERCHANT

Executives across fast-moving consumer goods (FMCG), automobiles, consumer durables and paints told FE that the fuel price revision could trigger a fresh round of price hikes in June and July, even as urban demand remains patchy and rural recovery fragile. Companies worry that a second wave of inflation, following earlier increases in crude-linked inputs such as chemicals, packaging materials and derivatives, could further dampen discretionary consumption in FY27.

“From a demand perspective, the focus will be on essentials. Discretionary spending will moderate as inflationary pressures grow,” Mohit Malhotra, global CEO, Dabur, said. “While FMCG companies were taking calibrated price hikes in April-May, another round now looks unavoidable,” he said.

Dabur had last week announced a 4% price increase across categories to offset inflationary pressures in the June quarter. Malhotra indicated that a second round of hikes could follow in the September quarter.

Consumer durable makers are also preparing for another increase in prices across categories such as ACs, and refrigerators and washing machines.