Prices for products like biscuits, snacks, soaps, and detergents are expected to increase by 6-7% soon, following the government’s recent 20% hike in customs duty on crude and refined edible oils. Companies use refined palm oil, which makes up 12-20% of their costs. With rising raw material prices, price hikes are likely after nearly nine months of stable pricing.
Krishnarao Buddha from Parle Products, India’s largest food company, said that apart from palm oil, other ingredients like wheat have also become more expensive. The price increase is expected to balance out the recent volume-led growth in sales.
India imports almost 95% of its edible oils, so the higher duty affects many products. Palm oil is a key ingredient in food items like biscuits and snacks, and also in personal care products like soaps and shampoos.
Companies are also dealing with rising costs of other food items like tea, cocoa, and vegetables. Mohit Malhotra, CEO of Dabur, said they might need to raise prices in their food products due to increasing inflation.
After a period of stable prices, some companies, like Britannia, are preparing to adjust prices again to handle expected inflation. Analysts predict that larger companies will handle the price hikes better than smaller ones, potentially gaining more market share during this time.
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