With increasing global oil prices, FMCG companies have been hard put to contain the resultant input cost increases over the last few months. But a combined impact of inflationary pressures and the VAT regime appears to be forcing their hand.
Product categories such as shampoo, toothpaste, and even detergent, have witnessed sporadic price hikes over the last few days.
HLL has been the first to hike prices, as a result of which Pepsodent and Close Up toothpastes are dearer by up to five per cent, and Sunsilk and Clinic Plus shampoos by up to 10 per cent.
An HLL spokesperson admitted that the 175 g Pepsodent now comes Rs 2 dearer at Rs 42, while the 150 g pack of Close Up is also Rs 2 dearer at Rs 44.
The 400 g pack of Sunsilk shampoo has become costlier by Rs 10 at Rs 135, while the 200 ml pack of Clinic Plus is costlier by Rs 5 at Rs 60.
Industry sources said that Colgate Palmolive has also increased prices of its economy brand, Cibaca Top, by Rs 2, but company officials could not be reached for confirmation.
India Household & Healthcare Ltd (IHHL), the sole licensee for LG Household & Healthcare Ltd (which owns the LG Care brand) in India, is also contemplating a price increase along several product categories.
The IHHL Managing Director, Mr Vijay R. Singh, said: "Of course price correction will have to happen, since input costs have gone up significantly. We do not manufacture in India, and the next round of imports will happen in August. We will have no option but to increase prices at that time."
Currently, one kg of IHHL's Super Enz detergent is priced at Rs 108 while 200 ml of Double Rich shampoo comes for Rs 99.
However, Dabur India plans to maintain prices across all product categories for the time being.
While acknowledging the fact that inflation has led to a severe margin squeeze, Henkel India's Managing Director, Mr A. Satish Kumar, said: "We have increased prices of our detergent brand, Mr White, by Rs 2 to Rs 41 per kg a few weeks back. I am not sure if a further increase would be absorbed by the market. FMCG companies will have to bring greater cost efficiencies to survive the present inflationary conditions."
And while most FMCG companies have passed on some cost increase to the consumer, analysts are of the opinion that the latest price correction may in some cases be a strategy to shore up margins.