As we enter 2020, we may have to get ready to shell out more for groceries. Despite consumption slowdown, fast-moving consumer goods (FMCG) companies may be forced to increase prices in some categories. The key reason for these price increase is rising commodity and raw material costs. Here are five categories that are likely to push up shopping bills, going forward:

Onions

Onion prices have increased by 400 percent since March; said Ram Vilas Paswan, minister of consumer affairs, food and public distribution; in Lok Sabha. Unseasonal rainfall had destroyed about 75 percent of the monsoon crop which resulted in a demand supply mismatch, eventually leading to soaring onion prices, he said. Increase in transportation costs, lack of storage and hoardings at various levels were some other factors that led to rise in onion price. Prices are unlikely to stabilise untill there are significant amount of imported onions that come to the market, say market watchers. Owing to this, it is likely that onion prices will remain firm at least for the next two months.

Milk

Milk availability across states has been under severe stress for the last couple of months owing to the extended monsoon and delayed onset of the flush season. This made it inevitable for dairy companies to take a price increase. Players such as Amul and Mother Dairy have already passed on the price increase to consumers. The price hike for milk pouches has been in the range of Rs 2 – Rs 3 per litre. The increase in prices of cattle feed by more than 35 percent has also been a key trigger for the price hike.

Biscuits

Biscuit makers are expected to take a 3-6 percent price increase owing to rising raw material costs. Escalation of commodity prices such as edible oil, wheat flour and sugar may lead to price increases in the biscuits space. “The price of wheat flour has definitely gone up year-on-year. In South, it is selling at about Rs 24 per kg and it will be slightly lower in North India. There are additional and handling costs that also add costs for small and medium manufacturers,” said an official from Roller Flour Millers' Federation of India. For small packs, the price increase is likely to be in the form of a gram reduction and for bigger packs the price raise will most likely be in absolute value terms.

Cooking Oil

Costlier imports have put pressure on the prices of edible oil. Palm oil prices have been up more than 35 percent in the last two months. Some edible oil companies did marginal price increase at the end of November or beginning December. If the prices remain at this level, companies may be forced to consider another round of increase in price. Therefore as of now, edible oil makers are in a wait and watch mode. There may be some decision on pricing likely in the next two–three weeks.

Bread

Rising input costs have put pressure on bread makers. If these pressures don’t ease off, the All India Bread Manufacturers Association expects that the industry to take to a 7 to 12 per cent price hike over the next two weeks. Small and medium manufacturers may be the first to go ahead with a price hike. The quantum of forward buying will also determine the timing of the price hike.

First Published:Dec 26, 2019 1:38 PM IST