In the past year, India’s middle class has been stung by an average 20 percent FMCG inflation while fighting with Covid-19 disease.
Why Would This Happen?
This was caused by the consumer firms as it affected substantial price hikes across 40 percent of grocery products that include edible oils, staples, personal care and home care products that consumers buy every month.
Out of all this, the most glaring price hike has taken place in edible oils.
During the last year, edible oils MRP has shot up close to 50 percent.
In April last year, consumers of Fortune Oil were paying Rs 135 compared to Rs 215 for a one-liter pouch of oil today.
In the same way, a 1-liter pouch of Ruchi Gold oil is priced at Rs 170 as of May this year was costing Rs 129 in April last year
Apart from this, the prices of sugar and rice have increased marginally.
Dramatic Increase In Prices
On the other hand, the price hikes in other categories such as tuvar dal and urad dal have been more dramatic.
For instance, a 1-kg pack of tuvar dal is now Rs 107 while it was priced at Rs 81 earlier.
Interestingly, coffee and atta prices remain unchanged while tea prices have increased by 15-20 percent.
As a 1-kg pack of Aashirvaad Atta has been consistently selling at Rs 57.
Coming to biscuits, its cost hasn’t increased either.
The CEO and Co-Founder, Shop X, Amit Sharma said, “the moderately affected categories are rice (7 per cent), soaps (15 percent), detergent (10 per cent), floor cleaners (5 percent) and sugar (5 percent). Oil is the worst affected due to price rise and we have seen more than 50 per cent hike within a year,”.
In case of soaps, a 125-gm cake of Lifebuoy soap which was priced at Rs 22 in April last year now costs Rs 27.
The game changes for the premium soaps where there has been a steeper increase.
For instance, Dove soap, which was earlier priced at Rs 123, now costs Rs 142.
Cleaning detergent, a 1-kg pack of Surf Excel now cost Rs 128 which was earlier priced at Rs 120.
It seems that larger, premium packs have seen higher price hikes compared to the smaller packs, observes Prem Kumar, Founder and CEO, SnapBizz.
Coming to discounts and schemes, which were earlier given to the retailers to woo consumers have completely dried up.
In fact, the discounts have stopped across categories.
May be, E-commerce grocery shoppers are still getting discounts, but those discounts are being passed on by the retailer in order to maintain consumer stickiness.
Price Sensitive Products Reduced Grammage
In case of the price-sensitive products, FMCG firms haven’t raised prices but they have reduced grammage instead.
For instance, the fast-moving Maggi Noodles haven’t seen any price hike.
On the contrary, there is a reduction in volume as Nestle has reduced the weight of Maggi from 70 gm to 60 gm.
Sharma said, “Consumers have had to bear the brunt of lowered income levels and increased prices almost across the board over the last one year. The two key drivers have been upstream cost increase due to raw material and production costs, and downstream cost increase due to supply chain costs,”.