Packaging cost surge hits consumers, disrupts industry order cycles

Indore: A sharp surge and volatility in packaging costs are beginning to pinch consumers with rising input expenses pushing up prices of everyday essentials from grocery to diapers while disrupting order bookings across industries at the start of the financial year.At a time when companies typically lock in bulk contracts for the year, uncertainty in paper and plastic packaging prices has forced industries to hold back. This hesitation is slowing down business momentum and delaying production planning, especially in sectors such as FMCG, pharmaceuticals and food processing where packaging is a critical cost component."From April onwards, we had to revise prices of diapers by around 15 percent due to high input costs. Overall input cost has gone up by at least 30 percent, largely driven by imported raw materials," said a diaper manufacturer in Pithampur, requesting anonymity.Industry estimates suggest paper packaging costs have risen by about 15 percent, while plastic packaging has seen a much sharper increase of 40 to 50 percent. This imbalance is forcing companies to constantly recalibrate pricing, often passing on incremental costs to consumers in small but frequent hikes.For consumers, the impact is already visible in essential goods. Even marginal increases in packaging costs are translating into higher retail prices, particularly in staples and daily-use products."The cost of wheat flour has increased by around Rs 1 to Rs 1.5 per kg mainly due to higher packaging costs. Earlier we sold at around Rs 35 per kg, which has now moved to about Rs 36," said Amit Agrawal, a wheat processor from Palda industrial area.He added, "Plastic packaging costs have gone up by at least 50 percent. We are still managing due to old inventory, but fresh purchases will further increase input costs."The volatility has also changed how industries manage inventories and sign long term deals. "Demand has slowed down at these elevated prices and most companies are in a wait-and-watch mode. It has become very difficult to finalise long-term contracts because no one is sure where packaging costs will settle," said Rajesh Mittal, an industrialist based in Pithampur.Instead of stocking up at the start of the financial year, many units are now operating on minimal inventories, buying packaging material in smaller quantities despite higher costs, to avoid further risk."Industries are not maintaining inventories and are working on minimal stocks due to fluctuating packaging costs. This is impacting production planning and order commitments," said Swadesh Sharma, president of the MP Corrugated Boxes Manufacturers Association, which has over 115 members.