Prices of daily-use consumer products such as packaged snacks, detergents and cooking oils may increase by 4-7% after petrol and diesel prices rose to a record, companies said, worried that the inflationary trend could adversely affect demand.
The increase could reverse, to some extent, the benefits brought about after the GST Council slashed tax on 178 items to 18% in November last year from 28% earlier. That led companies to cut prices by 10-20% on detergents, deodorants, shampoos, snacks and edible oils.
“There could be 4-5% increase in prices across the sector in the next two quarters if crude prices remain at existing levels,” said Saugata Gupta, MD of Marico, the maker of Parachute hair oil and Saffola cooking oil. “Even though rural demand is expected to be better on account of good monsoon forecasts and companies would like to drive growth by absorbing crude-induced costs, the increase in crude prices over last year is significant.”
Petrol and diesel prices climbed as crude oil shot up by about 50% in the past year to touch $80 a barrel last week. The price of petrol in Mumbai was Rs 86.08 a litre on Monday, while diesel was Rs 73.64 a litre. Crude has fallen to $75, which may lead to lower fuel prices in the days ahead.