MUMBAI: As the West Asia war rages on, India’s middle class has begun bearing the brunt. From airfares to air-conditioners, home interiors, bottled water and even regular laundry services, companies across segments are starting to take price hikes to cope with inflating input costs on the back of of supply disruptions and soaring oil, derivatives of which are key to the manufacturing of a lot of components used in daily products. Much of the price increases will hit the markets from April, industry executives said.Godrej Appliances will take price hikes of 5-10% across categories including ACs, washing machines and refrigerators from next month, a company spokesperson said. In the case of white goods and broader durables, volatile commodity (metals like copper etc) costs and new energy norms had already nudged companies to implement price increases; the war has only exacerbated the situation by triggering gas supply crunch and shortage of raw materials such as plastic.
Lack of availability of memory and SoC chips have continuously been pushing up prices of television sets and now with the war-led disruption, there is expected to be another 1-2% impact on prices, said Arjun Bajaj, director at Videotex which manufactures TVs for brands. Polymer prices, for instance, which are used in cabinet parts, cables and insulation materials have increased by nearly 40-50% per kg in recent days while cost of packaging materials have gone up 80%, said Bajaj. With input costs rising across materials such as plywood, adhesives, hardware, Bengaluru-headquartered home interior firm DesignCafe will be implementing price hikes in the range of 10-15% for new customers from April 1. “There is also growing uncertainty around material availability in the coming weeks due to fluctuating stock levels across the supply chain,” said CEO & co-founder Shezaan Bhojani. Some suppliers have also introduced temporary surcharges for 30 to 60 days, with a wait-and-watch approach thereafter, said Tanuj Choudhary, co-founder & COO at HomeLane. New Delhi-based laundry firm Perfecto Cleaners is now implementing an increase in service pricing as the shift to electric alternatives from LPG has led to rise in expenses, said founder Kshitij Rajpal. The turn around time for stores dependent on gas supplies are suffering, said Arunabh Sinha, founder at Uclean. Bisleri has raised the rates of its packaged water bottles by 11%. The impact of the war is far and wide, touching almost every sector. Indian carriers Air India, Indigo and Akasa Air have already started levying a fuel surcharge which means air tickets will become more expensive. “Discretionary spending like dining out and travel could weaken first,” said analysts at The Knowledge Company in a recent study. Besides the strain on consumer pockets, there’s also growing apprehension of job losses in labour intensive sectors such as restaurants if the turmoil persists, giving the common man more reasons to worry. “Fund flow is certainly an issue now. There are no job cuts yet but if this gets prolonged, then there will definitely be,” said Mumbai-based restaurateur and NRAI vice-president Pranav Rungta.FMCG firms may raise MRPThe full effect of the rise in plastics and logistics costs will start playing out by next month. If the situation persists, many FMCG companies will be forced to increase their MRPs to manage the high-cost environment, said Piruz Khambatta, group chairman at Rasna. “Our focus is on ensuring accessibility through the right product mix and formats. At the same time, we will continue to monitor the external environment and take appropriate action should the need arise,” said Rakshit Hargave, MD & CEO at Britannia. Margin pressure is likely to show up through smaller packs, selective hikes or lower promotions, analysts said.
