From Maruti to Nissan, from Hero to Havells, from cotton to cement– everyday products are set to get more expensive in India
- Essential fuels like petrol and diesel are already too expensive.
rise in food pricesis relatively low compared to last year but still rising fast.
Hero Motocorpto Maruti, from Havells to Blue Star, from TTK Prestigeto Finolex, companies are looking to hike prices to meet rising costs.
- Meanwhile, falling savings and rising household debt, coupled with an uncertain future due to the second wave of COVID-19 infections, is likely to put severe pressure on people’s finances and their confidence.
AdvertisementThe year 2020 was bad but 2021 has hardly been a relief for Indian families. The second wave of COVID-19 cases has filled WhatsApp chats (and other social media) with fearful exchanges about the possibility of yet another lockdown. The possible dent in consumer confidence, which improved in January, may take a further knock from rising cost of everyday essentials.
What makes this threat to people’s livelihood even worse are the rising prices of daily essentials and the depleted savings. To top up the miserable feeling, the salaried class in the private sector is going to see a fall in take home pay due to the new definition of wages that kicks in from April 1.
Food and fuel are already taking a big chunk out of people’s earnings
Essential fuels like petrol and diesel are already too expensive. At 8.76%, food inflation was already high in February 2020. So compared to that a 4.25% rise in food prices in February this year may seem slower but it is still significant.
While the Reserve Bank of India (RBI) expects prices to be stable hereon, any supply disruption due to measures taken to curb the spike in COVID-19 cases will only make it worse.
Raw materials such as palm oil, copra and edible oils have risen sharply. Since price hikes have been quite limited over the past two years, Dabur has room to raise prices this year, the management told analysts recently. The company sells everyday items like toothpaste and fruit juices to branded honey and mosquito repellents.
Soap makers have already hiked prices by 5–6%, and another round of a 3% hike is likely, an Edelweiss report dated March 19 said.
Crude oil prices are up 26% compared to a year earlier, which makes nylon more expensive. That, in turn, will increase prices of cotton that is a competing commodity. Wholesale prices of cotton are already up 24% between October 2020 and February this year. And that could, eventually, reflect in the prices of textiles and apparels.
Hooked to WhatsApp, Facebook, Instagram or Youtube? Prepare to shell out more
The glory days of India’s famous dirt-cheap mobile data plans are well behind us. The market is shrinking, effectively, into a duopoly between Airtel and Reliance Jio.
While Vodafone Idea is getting relegated to the margin, the Aditya Birla Group company may have to increase tariff to stay in the game, allowing Mukesh Ambani and Sunil Mittal to follow suit. So mobile bills are going to get more expensive.
AdvertisementCost of metals like steel, aluminium, palladium, platinum and rhodium are up 30% in the last six months, according to JM Financial. These are key inputs for automobiles and the rise in prices reflect in the cost of buying with a lag of a few months.
No wonder, India’s largest motorbike maker Hero MotoCorp just announced a hike of up to ₹2,500 per unit from April 1. Other major players in the two-wheeler space like Bajaj Auto and TVS Motor have already hiked by 2-3% in the last few months, over and above a 20% rise in the last couple of years due to the shift to BS-VI models to reduce pollution.
Those who planned to buy cars may have to shell out more too. Maruti Suzuki and Nissan have already announced that the rising price of raw materials will force these companies to raise prices in April.
India’s largest consumer appliances maker, TTK Prestige, known for its pressure cookers hiked prices, on average, by 9% across product categories including mixer grinders and gas stoves. The company’s smaller peer Butterfly Gandhimathi has hiked prices by 5% in December but, yet another one, Hawkins hasn’t followed suit yet.
The price of copper is near an all-time high nearly twice of what it was five years ago. So, cable makers like Finolex Cables and Polycab have already passed the pressure on to their customers. KEI Industries, which makes cables, is revising prices every 15 days based on the prices of the key raw material copper, Edelweiss said.
And, that means the cost of production is significantly higher for electrical appliance makers like Havells and V-Guard Industries. Especially in the case of V-Guard, which is popular for its inverters and voltage stabilisers, over 46% of the cost is copper, according to analysts at Edelweiss.
Air cooler major Symphony raised prices in January, long before the summer sun started to sting. Why will air conditioners be left behind? Blue Star, which raised prices by 5-8% in January, will push prices further up by another 3-5% from April, Managing Director B Thiagarajan told the Economic Times on March 23.
A lot of dream homes were stalled by the pandemic and the lockdown. While the construction of these homes has resumed in full gusto, the cement needed to build these is at least 7-8% on average in the last one year. Dealers told analysts at Emkay Global that companies like Ultratech, ACC and Ambuja Cement tried to increase prices again, by ₹10-20 a bag, but it has not been implemented yet.
There is added pressure on families in terms of healthcare, either in terms of COVID-19 treatments or the cost of vaccination or both. Even for salaried employees in India, who form a small proportion of the total workforce, the average rise in remuneration is likely to be 7.7%. But a big chunk of the rise may not land in their bank accounts — it will go into provident fund and gratuity contribution, instead — because the new labour codes would have kicked in from April 1.
AdvertisementOf course, if the second wave triggers another economic crisis, many families may not even have the same amount of cushion from their past savings. In the last five years, the average annual household savings in India has grown 64%. However, in the same time, average household debt has increased 133%, according to the latest data from the RBI.
None of this would be comforting for households staring at a limited income and an uncertain future.
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