Festive Season May See Break From Price Surges

Consumer firms hint at a breather as costs decline

- Sharleen D'souza, Shally Mohile & Ishita Ayan Dutt

Indian consumers are likely to get respite from rising prices just before the festival season. Some consumer companies, including automakers, have indicated that they are planning to pause price hikes just before demand picks up in August, while keeping a close eye on volatile raw material prices.

Consumer product companies have defended steep hikes over the past year, arguing that their price increase has remained lower than the rise in commodity prices.

"At a macro level in the June quarter, our commodity price inflation was 20 per cent. Our price increase has been 12 per cent, (though) it gets accentuated in certain categories," said Sanjiv Mehta, MD & CEO of Hindustan Unilever, a subsidiary of global consumer product maker Unilever.

Parle Products, an unlisted food company, plans to wait for a month before taking further decisions on pricing.

"If commodity prices remain low, we will give discounts on bigger packs and promotion offers on smaller packs," Mayank Shah, category head at Parle Products, told Business Standard. But Shah said as wheat prices have started to rise again since last week, the company has decided to wait before taking any decision on discounts or promotions.

According to economists, inflation is likely to ease by October as the monsoons have been progressing well with the cumulative rainfall being 9 per cent above the long-term average up to July 12. Also, global commodity prices have moderated due to increased recession risks in the US and Euro zone. If this trend continues, this will be good news for Indian consumers who are either downgrading to cheaper products or postponing their purchases.