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Inflation pressure will be on FMCG companies in the second quarter, disclosed in the report

Photo:FILE Inflation pressure will be on FMCG companies in the second quarter

Highlights

  • Prices of goods will increase in the second quarter
  • Will come down to 5 percent by March
  • International oil prices fall

FMCG Companies: in the second quarter FMCG Companies are going to be hit by inflation. The report revealed that despite easing inflationary pressures on supplies of some raw materials for the FMCG industry, which manufactures everyday consumer products, manufacturers are apprehensive that this will continue to impact prices and margins in the current quarter. Listed FMCG companies such as HUL, ITC, Godrej Consumer Products, Nestle, Dabur and Britannia reported mixed results in the April-June quarter, impacting their margins and volume in some categories. There has also been a decline.

Stability forecast for the third quarter

FMCG companies expect volumes to continue to decline in the rural sector as well. However, from the third quarter of the current financial year 2022-23, some stabilization in business and improvement in demand is expected. Companies like Britannia Industries have increased prices in the last quarter but that too has not been able to neutralize inflation. However, in the current quarter of July-September, it will be covered to a large extent.

Prices of goods will increase in the second quarter

Varun Berry, managing director of Britannia Industries, recently said that the required price hike could not be done during the quarter. This will be done in the second quarter. On the other hand, when asked about inflation, Mohit Malhotra, Chief Executive Officer (CEO) of Dabur India recently said that inflation will not come down in the second quarter as well and there will be a reduction in margins. Sudhir Sitapati, Managing Director and CEO, Godrej Consumer Products, said sharp margin recovery is expected from the second half, with inflationary pressure easing. The consolidated net profit of Godrej Group’s FMCG unit fell 16.56 per cent in the first quarter.

Will come down to 5 percent by March

The ever-increasing retail inflation may come down by two per cent to five per cent by March next year. SBI said in the report that the retail inflation rate in the country has been above six percent for the sixth consecutive month. However, in the last three months, the steps taken by the government and the RBI have brought some relief on the inflation front. These steps include reduction in excise duty on petrol and diesel, restrictions on food exports.

International oil prices fall

The reduction in the rate of inflation has been contributed by the reduction in global commodity prices. Brent crude, the benchmark for international oil prices, is down nearly 9 per cent for the month. Crude has fallen below $100 for the first time since the Ukraine crisis. Apart from this, government intervention to reduce import duty and ban on export of wheat also helped in controlling inflation.

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Shivam Bangwal

Shivam Bangwal is an Indian based entrepreneur who is a tech, travel and coding enthusiast with a post graduation degree on Master's of Computer Applications. He is a founder of Youthistaan, People News Chronicle, Hitchhike TV, Branding Panther and many more.
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