InvestorQ : Do you see the FMCG companies gaining from the falling commodity prices?
rhea Babu made post

Do you see the FMCG companies gaining from the falling commodity prices?

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Riya Dwivedi answered.
4 weeks ago
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A sharp fall in the commodity prices are expected to ease the pressure on FMCG companies in India in a big way. Most of them have been under pressure amidst falling operating margins due to rising input costs. The trickle down effect on the consumer may take more time. For example, edible oil firms have reduced prices after the government nudged them to cut prices in line with lower duties. ON the positive side, the high inflation has protected margins, given them more pricing power and allowed periodic price hikes for FMCG players.

Inflationary pressures are abating and that seems to be the good news for the FMCG companies. With significant correction in palm oil derivatives and crude oil, it has hit raw material inflation flat and that is helping FMCG companies. Prices of most edible oils like sunflower oil are also down 7% month-on-month. However, crude is still going to be volatile due to supply chain constraints. However, the June 2022 quarter is likely to see gross margin contraction. However, even the packaging costs need to come down to be impactful.

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