Did your last grocery bill feel a little heavier than usual? From shampoo bottles to your morning biscuits, everyday essentials are set to get costlier, as a conflict unfolding thousands of kilometres away continues to ripple through global supply chains. Essential consumer goods are set to become costlier in the near term, as companies grapple with continuously rising raw material costs, according to a report by Systematix Research. On an average, raw material prices have increased by around 8–10%, prompting companies across categories to raise product prices by about 3–7% over the past one to two months.The agency added that more price hikes, along with reductions in product grammage, are expected to be highly likely in the food and beverage (F&B) and home and personal care (HPC) segments, as firms attempt to balance rising input costs.“We believe further price hikes/ grammage cuts are highly likely near-term in F&B/ HPC products as companies scramble to offset the inflationary impact with a combination of pricing, mix and cost savings”.According to the report, pricing is expected to play a larger role in driving revenue growth for consumer staple companies in the first half of FY27, with pricing and volume contributions likely to remain evenly split at 50:50.At the same time, the report cautioned that higher retail inflation may affect consumption volumes in the coming months.Palm oil prices increased by 11%, while Brent crude oil prices rose sharply by 32% due to the ongoing Middle East turmoil. Packaging material costs have also surged, with HDPE (High-Density Polyethylene) prices rising by 56%. HDPE is a petroleum-derived thermoplastic widely used in packaging such as shampoo bottles, detergent containers, jerry cans, bottle caps, and flexible packaging across the Food & Beverage (F&B) and Home & Personal Care (HPC) sectors.
What’s ahead for companies?
Part of this cost pressure had already started reflecting in company performance during the March quarter. The report said gross margins of major companies under its coverage contracted by around 50 basis points year-on-year and about 30 basis points quarter-on-quarter in the fourth quarter of FY26.It added that most of the current inflation impact is expected to be visible in the first half of FY27.Companies are expected to continue managing pressure through a mix of price increases, grammage cuts and operational efficiencies, as they work to protect profitability in an environment of elevated input costs.Meanwhile, the Middle East conflict has entered its three month, with no signs of slowing down. The conflict that began on February 28 after US and Israel launched joint strikes on Iran, has continued to send ripples across economies. After the attack Tehran tightened its noose on the strategicaly crucial Strait of Hormuz, draining energy supplies across the globe.