If you are planning to purchase an air conditioner or a refrigerator this summer, you may have to shell out more for your comfort. With the crisis in Ukraine getting deeper, leading manufacturers of consumer durable items like smart televisions (TV), AC or refrigerators are warning of another round of price hikes within weeks.
As Russian armed forces advance deeper into the heart of neighbouring Ukraine, prices of key raw materials like copper, aluminium, steel and plastic, apart from overall inflation, are now threatening further cost escalation for white goods items.
This has led companies like Godrej Appliances, Usha International and TV maker Superplastronics to urge consumers to prepone their purchases if they want to save some money.
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According to Kamal Nandi, Business Head and Executive Vice-President at Godrej Appliances, given the growing tensions between Russia and Ukraine, the commodity market could see further price rise soon.
These tensions have already taken the price of crude oil, aluminium and copper among other commodity prices to near multi-year highs. Iron ore and steel prices could also rise in the event of further escalation of the conflict.
"Since we already have stock in place, this may not impact our AC prices immediately. March is, therefore, the right time for consumers to make purchases, especially if they want to buy ACs," he told Business Today.
Recognising the constant price hikes for over a year, Nandi added, "Rising prices of commodities, global freight and raw materials shortages over the past year have led to significant price hikes in the white goods sector."
As per industry estimates, most leading brands have hiked prices of appliances and electronics by 15-30 per cent in the last one year as the cost of components, metals, plastic and ocean freight have surged by 25-500 per cent.
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Eric Braganza, President of apex industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA) said, "The industry has already seen a price hike at the beginning of January and we expect the increase to be around 5 per cent this quarter due to rise in commodity inflation. Global freight rates had been surging since the initial outbreak of Covid 19. Exorbitant freight costs have the potential to hurt both consumers and the industry."
"Thus, in the long run, it is imperative to ensure reasonable shipping costs for controlling commodity prices. Currently, if the crisis persists, the global oil prices will increase and may result in higher freight costs and that will have an impact on the industry," he noted.
According to Avneet Singh Marwah, chief executive officer of Superplastronics - exclusive brand licensee of Thomson, Kodak and Blaupunkt TVs in India, apart from a significant hit on commodity prices that would increase the cost of manufacturing, lead time (of ocean freight delivery) has also increased due to supply and logistics problems. As a result, the estimated time of arrival of vessels around the globe will be hit badly", said Marwah. "Last but not the least, sea freight prices will again spike, as there will be a shortage of vessels," he added.
Dinesh Chhabra, Chief Executive Officer, Usha International said that since Ukraine is a major source of minerals like copper (this war) could also result in scarcity of these minerals leading to rising mineral costs.
"The surge in crude oil prices and the prospect of a recession in Europe are likely to lead to an increase in import costs. We are currently assessing the situation as the impact will be better evaluated in a few days," Chhabra stated.
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