Hindustan Times (Noida)
As inflation pinches, consumers switch to smaller packs
Price-sensitive Indian consumers are settling on smaller packs as inflation begins to pinch.
Low-priced packs of beverages, personal care and commodities inched up by 2%, 4% and 10.5% of overall sales between January and the first week of March in rural India, according to data shared by retail technology platform Bizom.
In urban India, lower-priced confectionery, commodities, home care products, and packaged foods sales increased by 2.8%, 2.9%, 5.9% and 13.7%, respectively.
Commodities consist of packaged and branded edible oils, spices, rice, and flour.
To be sure, the switch to lowpriced packs in confectionery and beverages was also driven by higher out-of-home consumption during the period.
The contribution of highvalue packs across categories in urban India fell, according to the retail intelligence platform that tracks sales across 7.5 million retail stores. Bizom compared the data to the pre-covid period 2020.
“In both urban and rural India, we see a strong trend of increased consumption across lower price points. Inflation is among the key drivers of this shift across categories, especially among commodity products driven by hyper-inflation in these products,” said Akshay D’souza, chief of growth and insights, Bizom.
Companies selling everything from soaps and detergents to biscuits and edible oils have introduced price hikes, prompting shoppers to pick out cheaper or value alternatives.
On Thursday, Bloomberg reported biscuits maker Britannia Industries Ltd plans to hike prices by as much as 7%.
In large categories such as soaps, detergents, shampoo, biscuits and edible oils, price hikes have been 15-20% from a year ago, analysts at BNP Paribas India said in a 17 March note. They said that such price hikes were insufficient to offset cost inflation. They also flagged some downtrading—the practice of customers switching to cheaper brands—in the fast-moving consumer goods market.
“With price increase ahead of income growth, sector volume growth moderated, and we see the likelihood of some downtrading. After large price increases in the preceding period, we have seen relatively lower price hikes in Januarymarch 2022, as companies could have been looking for consumers to absorb the recent price hikes and expecting commodity costs to moderate,” they said.
Meanwhile, fewer social interactions meant people were cutting down on usage in personal care, especially in rural areas.
Companies said that the higher fuel prices could put pressure on household budgets, especially for socio-economic classes B and C. .