Indian Firms Plan Fresh Price Hikes, Testing Inflation Outlook

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Or sign-in if you have an account.n[{g0[1aawe0jb16p9obboxz_media_dl_3.png India's Ministry of Statistics a(Bloomberg) — India’s largest consumer companies are gearing to raise prices on products from toothpaste to tires and paint ahead of the festival season and for the second straight quarter, as the prolonged Middle East conflict drives up commodity costs and threatens to keep inflation elevated.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountHindustan Unilever Ltd. will have measured price increases over the coming quarter in categories including detergents and dishwashing bars. At least seven other companies, from Dodla Dairy Ltd. and Asian Paints Ltd., also plan to raise prices, according to their post-earnings calls and media briefings.“Given the external volatility, we continue to see inflation in crude-linked derivatives and are taking calibrated price increases across the segment” for home care products, India’s largest consumer goods firm Hindustan Unilever Chief Financial Officer Niranjan Gupta told analysts this week.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againConsumer prices rose above the Reserve Bank of India’s 4% target for the first time in nearly a year and a half in June as food and fuel costs climbed. Though the gauge remained within the central bank’s 2%-6% tolerance band, price pressures are expected to intensify in the coming months as companies raise prices and a deficient monsoon raises the risk of higher food prices. The RBI expects inflation to average 5.1% in the fiscal year ending March 2027.The persistently high energy costs in the wake of the Iran war means no quick relief is expected anytime soon. With the US-Iran fight flaring up again, companies are planning a second round of price hikes for everything from home appliances to kitchen staples. Havells India Ltd. has raised prices by as much as 8%, while salt from Tata Consumer Products Ltd. is pricier by about 7%. The latest price increases coincide with the incoming local festival season, which typically runs from August to November. This is also when consumer spending typically surges, especially during the Hindu festival of lights, Diwali. The period accounts for nearly a third of annual sales for many companies, raising the likelihood that stronger demand will allow business to pass on higher costs.The price increases will test not just the strength of India’s consumption demand but also its policymakers as they watch inflation pressures closely.The Reserve Bank of India bank has said it would respond only if inflationary pressures become more broad-based. India’s finance ministry warned Wednesday that price pressures are spreading beyond food, with higher global fuel costs and unfavorable weather feeding through to a wider range of consumer prices. The central bank has kept interest rates unchanged this year and is widely expected to do so again when its six-member monetary policy committee meets Aug. 3-5. Economists say the trajectory will depend on whether geopolitical tensions keep oil prices elevated and whether the monsoon damages the summer-sown crop harvest.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.“Some price pass-through is inevitable, given the magnitude of input cost pressure and margin pressure on firms,” said Sonal Varma, chief economist for Asia ex-Japan at Nomura Holdings Inc.Demand has so far been stable across rural and urban India, according to company commentary. A Retailers Association of India survey showed retail sales grew 6% from a year earlier in June, higher than May. “We are in a comfort zone at the moment,” said Arvind Singhal, chairman of consultancy The Knowledge Company. Indicators including goods and services tax collections and highway toll receipts are also holding up, suggesting demand is steady, he said.Still, companies are watching for any impact from the price increases, as well as risks from the monsoon. “While the demand has remained stable so far, the forecast of a below normal season, combined with El Nino risk is a reminder that consumption recovery in India rarely moves in a straight line,” Ravi Kant Jaipuria, chairman at Devyani International Ltd. that runs KFC and Pizza Hut outlets in India, told analysts Wednesday. —With assistance from Alisha Sachdev.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.