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Covid-led FMCG inflation stings middle class! 40% grocery costlier; edible oil up 50%

Covid-led FMCG inflation stings middle class! 40% grocery costlier; edible oil up 50%

The most glaring price hike has taken place in edible oils where MRP has shot up close to 50 per cent in the last one year. Consumers of Fortune Oil for instance, are paying Rs 215 for a one-litre pouch of oil today, as opposed to Rs 135 in April last year

40 per cent of grocery products more costly now 40 per cent of grocery products more costly now

India's middle class has been stung by an average 20 per cent FMCG inflation in the past year as consumer firms affected substantial price hikes across 40 per cent of grocery products including edible oils, staples, personal care and home care products that consumers buy every month.

The most glaring price hike has taken place in edible oils where MRP has shot up close to 50 per cent in the last one year. Consumers of Fortune Oil for instance, are paying Rs 215 for a one-litre pouch of oil today, as opposed to Rs 135 in April last year. Similarly, a 1-litre pouch of Ruchi Gold oil, which cost Rs 129 in April last year is priced at Rs 170 as of May this year. While prices of sugar and rice have increased marginally, price hike in categories such as tuvar dal and urad dal have been more dramatic. A 1-kg pack of tuvar dal, which was priced at Rs 81, is now Rs 107. While coffee prices remain unchanged, tea prices have increased by 15-20 per cent.

Price of atta on the other hand, hasn't increased. A 1-kg pack of Aashirvaad Atta for instance, has been consistent at Rs 57. The cost of biscuits hasn't increased either. "The moderately affected categories are rice (7 per cent), soaps (15 per cent), detergent (10 per cent), floor cleaners (5 per cent) and sugar (5 per cent). Oil is the worst affected due to price rise and we have seen more than 50 per cent hike within a year," points out Amit Sharma, CEO and Co-Founder, Shop X.

While a 125-gm cake of Lifebuoy soap that was priced at Rs 22 in April last year now costs Rs 27, it is the premium soaps where there has been a steeper increase. Dove soap, which was earlier priced at Rs 123, now costs Rs 142.  On the other hand, a 1-kg pack of Surf Excel, which was earlier priced at Rs 120 now costs Rs 128.

Larger, premium packs have seen higher price hikes than smaller packs, observes Prem Kumar, Founder and CEO, SnapBizz. While a 1-kg pack of Aashirvaad Atta hasn't undergone any price increase, the price of the 10-kg pack has seen a Rs 10 price hike (from Rs 480 to Rs 490). Similarly, price of a 10-kg pack of Naturefresh Atta has risen from Rs 310 to Rs 380. "In atta, due to hike in wheat pricing, local brands have increased prices by 8-15 per cent whereas brands like Aashirvaad and Pillsbury remain the same, but schemes are withdrawn and higher slabs to qualify schemes are announced," explains Kumar.

SnapBizz data suggests that while prices of products such as biscuits haven't gone up, discounts and schemes given to the retailers to woo consumers have completely dried up. In fact, discounts have stopped across categories. E-commerce grocery shoppers may still be getting discounts, but those discounts are being passed on by the retailer in order to maintain consumer stickiness.

In price sensitive products, FMCG firms haven't raised prices but they have reduced grammage instead. Fast-moving Maggi Noodles hasn't seen any price hike, but there is a reduction in volume. Nestle has reduced the weight of Maggi from 70 gm to 60 gm. "Consumers have had to bear the brunt of lowered income levels and increased prices almost across the board over the last one year. The two key drivers have been upstream cost increase due to raw material and production costs, and downstream cost increase due to supply chain costs," says Shop X's Sharma.

However, the price hikes haven't led to a dent in consumption, claims SnapBizz's Kumar. "As consumers are forced to stay indoors, their monthly grocery bills have gone up. Their average pay out may have increased by 5 per cent, but since other expenses such as dining out, travel and going to theatres has significantly reduced the increase in grocery bills isn't impacting them too much," he added. 

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