NEW DELHI: The escalating tensions between Russia and Ukraine could lead to a major crisis across the world, not barring the FMCG and retail sector. Experts say this could worsen the inflationary pressures the sector is reeling under.
Krishnarao Buddha, Senior Category Head at Parle Products. says, it is going to have a huge effect on crude oil. “For the previous 7-8 years it had been below 100 dollars but today it has crossed the 100-dollar mark, impacting several industries in addition to the food industry.
For instance, formalin oil, RBD oil will see a hike in price. Price hikes will have a huge impact on most of our products,” he said, adding that vegetable oil, which is used in several other FMCG products like anti-caking agents, in making soaps etc, will also experience inflation.
“It is possible that other input materials like packaging may also have a bearing upon it. Looking at the bigger picture, all oil-based products and derivatives will lead to inflation and brands will be forced to take further strides in increasing prices,” said Buddha.
Akshay D’Souza, chief growth and insights officer at Retail Intelligence platform Bizom, also sees a risk in edible oil imports from the region, which is a key ingredient in many food products. “Sanctions that might be imposed on Russia will put further pressure on oil prices that had just started cooling for India’s consumers on the back of big import duty cuts over the last few months that were passed on by edible oil brands,” he adds.
Kumar Rajagopalan, the CEO of Retailers Association of India, says: “The escalating tensions can further push up prices and impact supply chains making them unpredictable, creating a demand-supply gap.” Avneet Singh Marwah, CEO at Super Plastronics Private Limited, also notes due to the disturbance, commodity prices can take a big hit. “Apart from that, lead time will also increase due to supply and logistics problem, as ETA of vessels around the globe will be hit badly,” he said, adding sea freight prices will again spike on shortage of vessels.