Hindustan Unilever Ltd (HUL) Chairman Nitin Paranjpe has said India is going through the most difficult economic situation, and persistent inflationary pressures are beginning to weigh on demand. According to him, this has prompted some buyers of fast-moving consumer goods (FMCG) to temporarily cut back on purchases through a period of price-stickiness.
“India is going through probably the most difficult economic situation. Inflation is high. We are probably getting to a situation where we have now seen 14 consecutive months of double-digit wholesale price inflation,” Paranjpe told shareholders virtually during his annual address, according to media reports. “I don’t know when we have last seen something like that. FMCG markets, which have generally been strong for a long period of time, have started seeing the effects of this.”
The Wholesale Price Index (WPI) inflation rose to a record high of 15.88 per cent in May, up from 15.08 per cent in April, with the rise in prices of vegetables, fruits, milk, manufacturing, fuel and power.
Inflation is testing the resilience of the fast-moving consumer goods (FMCG) market, Paranjpe told delegates at the annual general meeting of the country’s biggest consumer company. “And, more recently, we have seen market rates moderate and volume growth rates have actually become negative in the short term,” Economic Times quoted him as saying.
Consumer goods volumes fell about 1 per cent during FY22, according to global consumer research firm Kantar Worldpanel. HUL expanded value sales by 11 per cent last fiscal, largely driven by price increases as it tried to offset energy, packaging and transport costs that rose about 50 per cent from the past year, the report added.
“The immediate future is challenging, and it will require some astute handling and a balancing act to be able to make sure that growth does not stall and we are able to contain inflation,” added Paranjpe, chief people and transformation officer at Unilever in his first AGM as HUL’s chairman.
In the medium to longer term, HUL said it remained confident of FMCG demand and its growth rates due to low per capita consumption, a large and young population, a growing middle class, rising affluence and the adoption of technology.