FMCG Products May Become Costlier After Diwali

Fast-moving consumer goods (FMCG) companies faced a challenging second quarter (Q2) of the current financial year, as rising input costs squeezed profitability. Prices of key raw materials, including palm oil and sugar, increased by 18% to 21%. However, companies largely refrained from raising product prices during the quarter ended September, fearing that higher prices could hurt consumer demand. As a result, FMCG companies faced increased pressure on their profit margins compared with the corresponding quarter last year, with market estimates indicating a potential decline of up to 0.45%.

With input cost pressures continuing, companies are considering price hikes after Diwali to avoid disrupting festive-season sales. However, increasing prices of mass-market products remains a difficult decision, as steep hikes could weaken demand among price-sensitive consumers. Instead of relying solely on price increases, companies may focus on cost control and reducing pack sizes to protect margins while keeping products affordable. Market observers expect these strategies to play a key role in helping FMCG firms manage rising costs in the coming months.