Consumers of packaged goods get small packs for more bucks
NEW DELHI: Every kilogramme of packaged consumer goods sold in India in February-april was 10% costlier than it was a year earlier following the rise in raw material prices, researcher Kantar said on Tuesday.
While the average per-kg price of fast-moving consumer goods (FMCG) jumped 10.1%, the average pack size shrank by nearly 15%, Kantar said in its June FMCG Pulse update.
It reflected the attempts made by companies to cut product grammage to save on costs, it added. Grammage cuts were particularly pronounced in categories such as malted food drinks, salty snacks, soft drinks and hair oils.
The number of FMCG packs bought rose 15% in the same period, indicating that as prices rose, consumers purchased smaller packs. “To summarize, FMCG is starting to feel the pinch of high inflation,” it said in a note.
“There are certain high-frequency categories that for the time being are insulated, and are likely to continue performing well. As inflation deepens more and more, people will make use of free benefits that the government is offering and are likely to deploy the money saved thus to some other purchase,” it added.
Inflation is hurting both households as well as firms.
Official data released on Tuesday showed India’s wholesale price-based inflation touched a record 15.88% in May compared to 15.08% in April. Price rise of mineral oils, crude petroleum and natural gas, food, basic metals, non-food articles, chemicals and chemical products, food products and others, were behind this high rate of inflation, the ministry of commerce and industry said.
Meanwhile, firms have been passing on higher input prices to consumers, impacting consumption as buyers move to smaller packs or shift to cheaper brands. Households are also facing inflation across a range of day-to-day items. Overall, FMCG volumes declined 1.1% year-on-year in the three months ended 30 April 2022, while the sector reported value growth of 9% in the same period, Kantar said. April saw volumes decline 1.4%, the tenth straight month of decline in the last one year.
This, Kantar said, was largely on account of a slowdown in categories such as wheat flour and edible oils.