New Delhi: Sanjiv Mehta, CEO, and MD of Hindustan Unilever Limited (HUL) told the media in a recent interview that prices in the fast-moving consumer goods (FMCG) industry will increase further due to the rise in palm oil and crude oil prices. He said that till the commodity prices do not come down, the prices of FMCG products will continue to rise.
“It is difficult to predict what the exact amount of price increases will be, but the way we see it if the cost of the commodity continues to rise, the price will continue to rise,” he said. He said margins will be lower due to inflation but it will lead to recovery.
These products will have the biggest impact
He has said that due to the high prices of palm oil, skin cleaning products will be affected the most. This will be followed by a jump in the prices of laundry powder due to the rise in crude oil derivatives. According to Mehta, due to the rising prices of palm oil, many other products are also showing price increases. However, he did not call the closure of exports by Indonesia as a matter of great concern to the company. He said that the palm oil that HUL uses has not been banned.
The situation is not good since last year
Packaged consumer goods companies have been battling inflation since FY21. The war between Ukraine and Russia has worsened the situation and created supply shortages for many key commodities. Sanjiv Mehta believes that if the Russia-Ukraine war stops, then commodity prices will also come under control.
Indonesia banned exports
Indonesia, a major exporter of palm oil, last week banned its exports as it itself struggled with supply shortages and inflation. Palm oil accounts for about 40 percent of the total edible oil consumption in India and 60 percent of the imports. It is a major commodity for the FMCG and Food and Beverage (F&B) industries. India mainly imports it from Indonesia and Malaysia.
