The fast-moving consumer goods (FMCG) sector is currently under stress due to high inflation, said Harsh Mariwala, founder and chairman of packaged consumer goods company Marico.
He was speaking on the sidelines of an event in the city on Thursday.
However, Mariwala clarified that, by ‘stress’ he meant the low growth rate of the FMCG sector, which is historically used to have high growth levels.
Margins to get impact
FMCG companies have been facing the double whammy of unprecedented levels of inflation and volatility in input costs across commodities and sluggish consumer demand which has been impeding the industry from increasing prices.
The country’s retail inflation, which is measured by the Consumer Price Index (CPI), spiked to 7 per cent in August, up from 6.71 per cent in July, and remained above the RBI’s upper tolerance limit of 6 per cent for the eighth consecutive month.
Mariwala said, inflation levels are expected to come down in next 2-3 months, which will improve the profitability and will also cap further rise in price of products.
“Hopefully, from the third quarter of this year things should normalise but a lot of it depends on the environment because nobody can predict what is happening in the world today. As of today, things should improve,” he added.
Prices of several input commodities such as crude, palm oil have cooled down in recent times. However, Mariwala said, the commodity price correction is neutralised by the rupee depreciation in recent times.
The Indian rupee hit a historic low of 81.95 against the US dollar on Wednesday due to heavy forex outflows and strengthening US treasury yields. So far this year, the Indian currency has lost nearly 9 per cent of its value against the greenback.