The escalating tension between Iran, America, and Israel is now impacting the economy, and inflation is gradually rising. If the situation persists, everyday essentials like soap, soda, and cooking oil could soon become more expensive, increasing the burden on common people’s pockets.
It is being reported that FMCG companies are preparing to increase prices once again starting from the first quarter of FY2027.
NuWama’s Report Reveals
According to a report by Nuvama Institutional Equities, a sharp rise in crude oil prices and a weakening rupee are continuously increasing input costs. This is making it difficult for companies to keep prices stable. The brokerage firm’s report estimates that if the current raw material inflation persists, prices will increase by at least 3 to 4 percent in the first quarter of FY2027.
However, the impact in the fourth quarter of FY2026 is expected to remain limited due to existing stock levels, but as these stocks deplete, the industry is preparing for changes. Nuvama’s report states, “In our opinion, companies generally maintain 30-45 days of raw materials and finished goods, hence a price hike is likely in the first quarter of FY2027.”
Reasons for Rising Inflation
Most FMCG companies package their products like soap, biscuits, and shampoos in plastic, which is made from crude oil. Thus, when oil becomes expensive, packaging costs also increase, directly impacting product prices.
Additionally, the rising cost of crude oil has also increased transportation and logistics expenses. Container rents, shipping, and insurance have all become more expensive, leading to an increase in companies’ overall costs.
India also imports a large portion of its edible oil from abroad. If there are disruptions in the supply chain, it will affect edible oil prices, potentially making them even more expensive.
