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Consumers hit, prices of basic goods rise


Sonal Joshi,CNN-IBN
Jun 27, 2008 at 08:00am IST

New Delhi: The consumer's good days are over. After the double-digit inflation shocker, the consumer must get prepared for paying more for basic essentials from cereals, pulses to cosmetics and even electronic goods.

With inflation breaching the 11-per cent barrier and hitting a 13-year high, Fast Moving Consumer Goods (FMCG) companies are all set to raise their prices again. Even retail stores who are famous for giving huge discounts are shying away from any more offers.

"The prices could get worse, inflation could also get worse because petrol and diesel prices went up a couple of weeks back. The ripple effect of that will start happening. Vegetable and food prices have gone up because transporters have increased trucking rates," R Subramanian, MD, Subhiksha says.

The industry has been forced to hike prices to battle high raw material costs, and now it seems pretty certain that prices will rise even further as they have to maintain the margins.

Dabur CFO Rajan Varma cautions, "We will maintain previous margins and where input prices rise we will take corresponding price increase. If the need arises we will certainly increase prices."

The consumer durables industry is also likely to feel the crunch. Most companies hiked prices barely a fortnight ago and are now set to increase prices yet again.

"The bottom line is definitely under pressure. If the price of input is going to increase in future, we will definitely pass a part of it to the customer," says PK Gupta, Senior GM - Finance and Taxation, LGEIL.

Retailers are also expecting a change in the consumer buying habits and are of the view that as prices keep going up they expect consumer's to shift from premium to affordable products soon.

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