Companies prepare to hike prices of daily essentials after Diwali

Daily essential items may become more expensive for the general public after the Diwali festival. Due to the continuously rising prices of raw materials and an increase in packaging costs, various companies are now considering raising the prices of their products. According to a report by Amar Ujala, major companies such as Hindustan Unilever (HUL), Britannia, Dabur, and Tata Consumer are planning to increase the prices of selected items. Some companies may implement this price hike from December.

The direct impact of this price increase may be seen on soaps, biscuits, noodles, detergents, and packaged food items. Until now, companies were attempting to control cost pressures by reducing the weight of packets instead of increasing prices, but the possibilities of this option have now become limited. For example, there is no significant room left to further reduce the weight of a ₹10 Parle-G biscuit packet. This is a major dilemma for companies because reducing weight may upset consumers, while increasing prices may lead consumers to switch to other brands.

Companies have increased prices previously as well. Britannia, HUL, Dabur, and Godrej Consumer had increased prices by approximately 2 to 5 per cent in the June quarter. A price hike was also considered for the September quarter. Regarding Tata Consumer Products, the company increased tea prices by 8 to 10 per cent between June and September. Additionally, the company increased the price of a ₹30 salt packet to ₹32 in May, and subsequently raised it to ₹34 in October.

A primary reason behind the increase in production costs is the surge in plastic packaging prices. According to the report, plastic packaging has become up to 40 per cent more expensive, which has put heavy pressure on the total cost of products. Preparations are now being made to pass this increased cost burden onto the consumers.

Experts believe that this inflation will have the greatest impact on low-income families, as such families spend a large portion of their budget on daily essentials. Even a slight change in the prices of affordable items such as biscuits, noodles, soap, detergent, and edible oil can affect their purchasing power and buying habits.

According to Satish Meena, founder of Datum Intelligence, companies initially bear the burden of increased costs themselves, but in the long run, they increase prices by passing this burden to consumers. In the current situation, the rising prices of raw materials and packaging have forced companies to take this step. Thus, the household budget of the common man may be disrupted in the period following Diwali, as there is a full possibility that essential commodities will become dearer.