Cos wary of inflation taking a toll

MUMBAI: Consumer firms have largely escaped the scourge of West Asia war in the March quarter given that the impact was limited to only one month in Q4, but companies have pointed to inflationary pressures and higher costs on the back of soaring crude oil prices, indicating that price hikes are in the offing, their quarterly business updates showed.

"With Brent crude at between $100-110 and palm at between 4500-4800 MYR (Malaysian Ringgit), we expect a cost hit of 6-9%. We should be able to offset the impact of most of these cost increases through pricing, cost savings, leverage, and some prudent media optimisation," Godrej Consumer Products (GCPL) said, adding that it expects sustained inflation into the first half of FY27.

The war which has been dragging on for over a month now risks negating the impact of GST cuts and slowing consumption which had shown signs of initial pick up in Q4FY26 after months of sluggishness. Earlier on Tuesday, private weather forecaster Skymet predicted a below normal monsoons, a development which doesn't augur well for the rural economy which had been driving much of FMCG consumption for the past several quarters as high inflation and stagnant wages nudged the urban middle class to curtail spending. "We remain watchful of the evolving geopolitical landscape and will continue to take proactive measures to mitigate any potential impact on our operations and cost structure," Dabur said.

While forecasting a double-digit operating profit growth in Q4, Marico said that the macroeconomic impact of the evolving geopolitical situation in West Asia is a key monitorable. "While vegetable oils and crude-sensitive materials exhibit a pronounced upward bias, we will continue to judiciously exercise the pricing power of our franchises to alleviate the impact of the same," the maker of Saffola oats and Parachute Coconut Oils said.

In the border consumer space, the war has shown early signs of strain for some companies. In the QSR space, for instance, Jubilant Foodworks has reported Domino's India's like-for-like (LFL) growth to be at 0.2% (implies same-store sales decline) in Q4, which analysts attributed to commercial LPG supply constraints. Over 95% of its outlets are LPG-dependent, Elara Securities said in a note.


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