Consumer durable manufacturers on the path of constant price increases

The continued depreciation of the rupee against the dollar has added to the woes of consumer durables companies, which have no option but to raise prices again. The industry is actually grappling with a variety of problems simultaneously. Higher commodity prices, lockdown imposed due to covid in China and devaluation of rupee will further push up the prices of imported goods. In addition, interest rates are rising and the cost of working capital for companies is rising, leading to rising consumer EMIs (monthly installments), which are repaid by consumers taking loans to buy goods. As a result, consumer durables companies may have to raise the price of electronic items by 3 to 4 per cent in the current month and are likely to raise prices again in the next quarter to meet rising costs. The industry has raised prices about five to six times since 2021. There is nothing that can be done about the depreciation of the rupee against the dollar except the rise in prices.

The government's production-linked incentive scheme has helped companies set up factories, which could reduce India's dependence on imports in the next two-three years. Another important factor is the lockdown imposed in China by Kovid, which has disrupted the supply chain.

Some of these products, especially those with a five star rating, are out of stock due to shortage of essential items during summer months and high demand for air conditioners. But perhaps the most significant impact on spending has been the devaluation of the rupee against the dollar. Given the high share of imports in consumer goods, a weaker rupee will further increase costs. As well as a weaker rupee, rising crude oil prices will lead to an increase in freight costs that have also been rising in recent months. With the rupee depreciating, producers have no choice but to raise prices. Even in the case of air conditioners, 90 per cent of the goods are imported while 40 per cent of the refrigerator items are imported. Products such as expensive televisions, mobile devices, computers also have a higher proportion of imported goods. Due to the weak rupee, prices will rise again in June. Consumer durables include adversely affected areas due to rising raw material prices.