Consumer goods manufacturers predict a "modest increase" of 2-4% in product prices in 2024 as a result of year-on-year inflation in some commodities and higher wage costs, which will help to improve price-led growth in the fast moving consumer goods (FMCG) industry.
Companies including Godrej Consumer Products, Dabur, and Emami have stated that price-led growth will return to the industry. Hindustan Unilever (HUL), India's largest FMCG company, also expects some improvement. Dabur said it raised prices by 2.5% across its food portfolio, while Emami said it expects price increases of around 3% this year.
Mohit Malhotra, chief executive officer of Dabur India, stated that the inflation mix is shifting towards food. For example, food, cereals, and spices continue to experience double-digit inflation, which is not good news. It went down, but it's picked up again, he said.
"Even in honey, there is inflation. We have just taken a price increase in oral care, for example, driven by our competitor taking up a price increase. In healthcare, we might be forced to take price increases. Even in spices. So wherever the shoe will pinch, we will have to hike prices," said Malhotra.
Price growth, along with volume sales, is critical to overall FMCG growth recovery, with the former falling into negative territory for most companies last year due to steep deflation in input prices, resulting in product price drops that impacted sectoral growth. Volume has contributed approximately 65-70% of FMCG companies' growth, with prices accounting for the remainder.
